I 

112TH CONGRESS 

1ST SESSION H. R. 3342 

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

increase generic drug utilization under Medicaid. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 3, 2011 

Mr. BASS of New Hampshire (for himself, Mrs. EMERSON, and Mr. WELCH) 

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 encourage 

States to increase generic drug utilization under Medicaid. 

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’’. 

6 SEC. 2. SAVINGS REBATE FOR STATES THAT INCREASE GE7 NERIC DRUG UTILIZATION UNDER MEDICAID. 

8 (a) IN GENERAL.—Section 1903 of the Social Secu9 rity Act (42 U.S.C. 1396b) is amended by inserting after 

10 subsection (g) the following: 


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

2 2013, and 2014, if the generic substitution rate deter3 mined for the State under section 1927(l)(2) for the most 

4 recent preceding fiscal year for which data are available 

5 is greater than the State’s generic substitution rate (as 

6 so determined) for the second most recent preceding fiscal 

7 year for which data are available, the amount determined 

8 under subsection (a)(1) for the State for each quarter of 

9 the fiscal year shall be increased by an amount equal to 

10 50 percent of the generic drug utilization savings amount 

11 determined for the State and the quarter under paragraph 

12 (2). 

13 ‘‘(2) The generic drug utilization savings amount de14 termined under this paragraph with respect to a State and 

15 a quarter is the product of— 

16 ‘‘(A) the difference between the— 

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

18 for the corresponding quarter of the preceding 

19 fiscal year for providing medical assistance for 

20 multiple source drugs (as defined in section 

21 1927(k)(7)(A)(i)), as determined after the ap22 plication of section 1927(b)(1)(B); and 

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

24 for the quarter involved for providing medical 


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1 assistance for such drugs (as so determined); 

2 and 

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

4 State under section 1905(b).’’. 

5 (b) ANNUAL DETERMINATION OF STATE GENERIC

6 SUBSTITUTION RATES AND PERFORMANCE RANKINGS.— 

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

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

9 ‘‘(l) ANNUAL DETERMINATION OF STATE GENERIC

10 SUBSTITUTION RATES AND PERFORMANCE RANKINGS.— 

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

12 2012, and annually thereafter, the Secretary shall 

13 determine the generic substitution rate (as defined 

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

15 preceding fiscal year and the second most recent 

16 preceding fiscal year for which data are available. 

17 The Secretary annually shall publish on the Internet 

18 Web site of the Centers for Medicare & Medicaid 

19 Services the generic substitution rates determined 

20 for each State for such preceding fiscal years and, 

21 with respect to a State, the percentage increase or 

22 decrease in such rates when compared with each 

23 other. On the basis of such comparison, the Sec24 retary shall list the States in order of the States 


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1 with the greatest increase in the generic substitution 

2 rate. 

3 ‘‘(2) GENERIC SUBSTITUTION RATE.—In para4 graph (1), the term ‘generic substitution rate’ 

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

6 units for which payment is made to the State under 

7 this title for the 20 most widely prescribed multiple 

8 source drugs under the State program under this 

9 title that have a specific National Drug Code and 

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

11 (c) EVALUATION AND REPORT.— 

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

13 2014, the Secretary of Health and Human Services 

14 shall evaluate and report to Congress on the effec15 tiveness of the generic drug utilization savings pay16 ments authorized under section 1903(h) of the So17 cial Security Act (42 U.S.C. 1396b(h)) (as added by 

18 subsection (a)) in encouraging States to increase 

19 their Medicaid generic substitution rate. The evalua20 tion shall include the following: 

21 (A) An analysis of the amounts each State 

22 Medicaid program saves through increased ge23 neric drug substitution. 

24 (B) An analysis of any indirect savings to 

25 State Medicaid programs through increased 


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1 medication adherence due to increased accessi2 bility and affordability of prescriptions. 

3 (C) An analysis of future estimated sav4 ings to State Medicaid programs and the Fed5 eral Government after termination of the ge6 neric drug utilization savings payments author7 ized under such section. 

8 (2) MEDICAID GENERIC SUBSTITUTION RATE.— 

9 In paragraph (1), the term ‘‘Medicaid generic substi10 tution rate’’ has the meaning given the term ‘‘ge11 neric substitution rate’’ under section 1927(l)(2) of 

12 the Social Security Act (42 U.S.C. 1396r–8(l)(2)) 

13 (as added by subsection (b)). 

14 SEC. 3. INNOVATIVE HEALTH CARE SAVINGS PROGRAM. 

15 (a) IN GENERAL.—Section 1903 of the Social Secu16 rity Act (42 U.S.C. 1396b) is amended by adding at the 

17 end the following: 

18 ‘‘(aa) INNOVATIVE HEALTH CARE SAVINGS PRO19 GRAM.— 

20 ‘‘(1) IN GENERAL.—In addition to the pay21 ments provided under subsection (a), subject to 

22 paragraph (5), the Secretary shall provide for pay23 ments to eligible States for the implementation of 

24 programs to achieve reductions in expenditures 

25 under this title or under title XVIII. 


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1 ‘‘(2) ELIGIBLE STATE.—A State is eligible for 

2 a payment under this subsection if the State 

3 achieves a generic substitution rate (as determined 

4 under section 1927(l)(2)) of at least 92 percent. 

5 ‘‘(3) USE OF FUNDS.—A State may only use 

6 funds received through a payment under this sub7 section to implement programs to achieve reductions 

8 in expenditures under this title or title XVIII (such 

9 as innovative approaches to cost savings and health 

10 care delivery). 

11 ‘‘(4) APPLICATION, TERMS, AND CONDITIONS.— 

12 ‘‘(A) APPLICATION.—No payments shall be 

13 made to a State under this subsection unless 

14 the State applies to the Secretary for such pay15 ments in a form, manner, and time specified by 

16 the Secretary and such application is approved 

17 by the Secretary. 

18 ‘‘(B) TERMS AND CONDITIONS.—Payments 

19 made under this subsection are made under 

20 such terms and conditions consistent with this 

21 subsection as the Secretary prescribes. 

22 ‘‘(5) FUNDING.— 

23 ‘‘(A) LIMITATION.—The total amount of 

24 payments under this subsection for a quarter 

25 shall not exceed 5 percent of the sum of the geVerDate Mar 15 2010 22:57 Nov 08, 2011 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3342.IH H3342

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1 neric drug utilization savings amount (as deter2 mined under subsection (h)(2)) for all States 

3 for the quarter. This subsection constitutes 

4 budget authority in advance of appropriations 

5 Acts and represents the obligation of the Sec6 retary to provide for the payment of amounts 

7 provided under this subsection. 

8 ‘‘(B) ALLOCATION OF FUNDS.—The Sec9 retary shall specify a method for allocating the 

10 funds made available under this subsection 

11 among eligible States. 

12 ‘‘(C) FORM AND MANNER OF PAYMENT.— 

13 Payment to an eligible State under this sub14 section shall be made in the same manner as 

15 other payments under section 1903(a). There is 

16 no requirement for State matching funds to re17 ceive payments under this subsection.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 subsection (a) shall be effective for quarters beginning on 

20 or after the date of enactment of this Act. 

Æ 


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