I 
111TH CONGRESS 
1ST SESSION 
H. R. 904 
To amend title XIX of the Social Security Act to reduce the costs of prescrip-
tion 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 organiza-
tions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicaid Prescription 
Drug Rebate Equalization Act of 2009’’. 
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SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS 
TO 
ENROLLEES 
OF 
MEDICAID 
MANAGED 
CARE ORGANIZATIONS. 
(a) IN GENERAL.—Section 1903(m)(2)(A) of the So-
cial Security Act (42 U.S.C. 1396b(m)(2)(A)) is amend-
ed— 
(1) in clause (xi), by striking ‘‘and’’ at the end; 
(2) in clause (xii), by striking the period at the 
end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(xiii) such contract provides that (I) 
payment for covered outpatient drugs dis-
pensed to individuals eligible for medical 
assistance who are enrolled with the entity 
shall be subject to the same rebate re-
quired by the agreement entered into 
under section 1927 as the State is subject 
to, and (II) capitation rates paid to the en-
tity shall be based on actual cost experi-
ence related to rebates and subject to the 
Federal regulations requiring actuarially 
sound rates.’’. 
(b) CONFORMING AMENDMENTS.—Section 1927 of 
the Social Security Act (42 U.S.C. 1396r–8) is amended— 
(1) in subsection (d)— 
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(A) in paragraph (1), by adding at the end 
the following: 
‘‘(C) Notwithstanding subparagraphs (A) 
and (B)— 
‘‘(i) a Medicaid managed care organi-
zation with a contract under section 
1903(m) may exclude or otherwise restrict 
coverage of a covered outpatient drug on 
the basis of policies or practices of the or-
ganization, such as those affecting utiliza-
tion management, formulary adherence, 
and cost sharing or dispute resolution, in 
lieu of any State policies or practices relat-
ing to the exclusion or restriction of cov-
erage of such drugs, provided, however, 
that any such exclusions and restrictions of 
coverage shall be subject to any contrac-
tual requirements and oversight by the 
State. As contained in the Medicaid man-
aged care organization’s contract with the 
State, the State shall maintain approval 
authority over the formulary used by the 
Medicaid managed care organization; and 
‘‘(ii) nothing in this section or para-
graph (2)(A)(xiii) of section 1903(m) shall 
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be construed as requiring a Medicaid man-
aged care organization with a contract 
under such section to maintain the same 
such policies and practices as those estab-
lished by the State for purposes of individ-
uals who receive medical assistance for cov-
ered outpatient drugs on a fee-for-service 
basis.’’; and 
(B) in paragraph (4), by inserting after 
subparagraph (E) the following: 
‘‘(F) Notwithstanding the preceding sub-
paragraphs of this paragraph, any formulary 
established by a Medicaid managed care organi-
zation with a contract under section 1903(m) 
may be based on the positive inclusion of drugs 
selected by a formulary committee consisting of 
physicians, pharmacists, and other individuals 
with appropriate clinical experience as long as 
drugs excluded from the formulary are available 
through prior authorization, as described in 
paragraph (5).’’; and 
(2) in subsection (j), by striking paragraph (1) 
and inserting the following: 
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‘‘(1) Covered outpatients drugs are not subject 
to the requirements of this section if such drugs 
are— 
‘‘(A) dispensed by health maintenance or-
ganizations, including Medicaid managed care 
organizations 
that 
contract 
under 
section 
1903(m); and 
‘‘(B) subject to discounts under section 
340B of the Public Health Service Act.’’. 
(c) REPORTING.—On a quarterly basis, the States 
shall report to the Department of Health and Human 
Services the total amount of rebates in dollars and volume 
received from pharmacy manufacturers for drugs provided 
to individuals enrolled with Medicaid managed care orga-
nizations that contract under section 1903(m) of the So-
cial Security Act (42 U.S.C. 1396b(m)) as a result of this 
section for both brand-name and generic drugs. This re-
port shall be made publicly available. 
(d) EFFECTIVE DATE.—The amendments made by 
this section take effect on the date of the enactment of 
this Act and apply to rebate agreements entered into or 
renewed under section 1927 of the Social Security Act (42 
U.S.C. 1396r–8) on or after such date. 
Æ 
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