I 
116TH CONGRESS 
1ST SESSION H. R. 5281 
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 
DECEMBER 3, 2019 
Mr. CARTER of Georgia (for himself and Mr. CA´RDENAS) 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 pric-
ing and related practices in the Medicaid program. 
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 ‘‘Drug Price Trans-
parency in Medicaid Act of 2019’’. 
SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE 
USE OF ABUSIVE SPREAD PRICING AND RE-
LATED PRACTICES IN MEDICAID. 
(a) PASS-THROUGH PRICING REQUIRED.— 
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS
(1) IN GENERAL.—Section 1927(e) of the So-
cial Security Act (42 U.S.C. 1396r–8(e)) is amended 
by adding at the end the following: 
‘‘(6) PASS-THROUGH
PRICING
REQUIRED.—A 
contract between the State and a pharmacy benefit 
manager (referred to in this paragraph as a ‘PBM’), 
or a contract between the State and a managed care 
entity or other specified entity (as such terms are 
defined in section 1903(m)(9)(D)) that includes pro-
visions making the entity responsible for coverage of 
covered outpatient drugs dispensed to individuals en-
rolled with the entity, shall require that payment for 
such drugs and related administrative services (as 
applicable), including payments made by a PBM on 
behalf of the State or entity, is based on a pass- 
through pricing model under which— 
‘‘(A) any payment made by the entity or 
the PBM (as applicable) for such a drug— 
‘‘(i) is limited to— 
‘‘(I) ingredient cost; and 
‘‘(II) a professional dispensing 
fee that is not less than the profes-
sional dispensing fee that the State 
plan or waiver would pay if the plan 
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS
or waiver was making the payment di-
rectly; 
‘‘(ii) is passed through in its entirety 
by the entity or PBM to the pharmacy 
that dispenses the drug; and 
‘‘(iii) is made in a manner that is con-
sistent with section 1902(a)(30)(A) and 
sections 447.512, 447.514, and 447.518 of 
title 42, Code of Federal Regulations (or 
any successor regulation) as if such re-
quirements applied directly to the entity or 
the PBM; 
‘‘(B) payment to the entity or the PBM 
(as applicable) for administrative services per-
formed by the entity or PBM is limited to a 
reasonable administrative fee that covers the 
reasonable cost of providing such services; 
‘‘(C) the entity or the PBM (as applicable) 
shall make available to the State, and the Sec-
retary upon request, all costs and payments re-
lated to covered outpatient drugs and accom-
panying administrative services incurred, re-
ceived, or made by the entity or the PBM, in-
cluding ingredient costs, professional dispensing 
fees, administrative fees, post-sale and post-in-
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS
voice fees, discounts, or related adjustments 
such as direct and indirect remuneration fees, 
and any and all other remuneration; and 
‘‘(D) any form of spread pricing whereby 
any amount charged or claimed by the entity or 
the PBM (as applicable) is in excess of the 
amount paid to the pharmacies on behalf of the 
entity, including any post-sale or post-invoice 
fees, discounts, or related adjustments such as 
direct and indirect remuneration fees or assess-
ments (after allowing for a reasonable adminis-
trative fee as described in subparagraph (B)) is 
not allowable for purposes of claiming Federal 
matching payments under this title.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1903(m)(2)(A)(xiii) 
of 
such 
Act 
(42 
U.S.C. 
1396b(m)(2)(A)(xiii)) is amended— 
(A) by striking ‘‘and (III)’’ and inserting 
‘‘(III)’’; 
(B) by inserting before the period at the 
end the following: ‘‘, and (IV) pharmacy benefit 
management services provided by the entity, or 
provided by a pharmacy benefit manager on be-
half of the entity under a contract or other ar-
rangement between the entity and the phar-
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS
macy benefit manager, shall comply with the re-
quirements of section 1927(e)(6)’’; and 
(C) by moving the left margin 2 ems to the 
left. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection apply to contracts between States 
and managed care entities, other specified entities, 
or pharmacy benefits managers that are entered into 
or renewed on or after the date that is 18 months 
after the date of enactment of this Act. 
(b) SURVEY OF RETAIL PRICES.— 
(1) IN GENERAL.—Section 1927(f) of the Social 
Security Act (42 U.S.C. 1396r–8(f)) is amended— 
(A) by striking ‘‘and’’ after the semicolon 
at the end of paragraph (1)(A)(i) and all that 
precedes it through ‘‘(1)’’ and inserting the fol-
lowing: 
‘‘(1) SURVEY
OF
RETAIL
PRICES.—The Sec-
retary shall conduct a survey of retail community 
drug prices, to include at least the national average 
drug acquisition cost, as follows: 
‘‘(A) USE
OF
VENDOR.—The Secretary 
may contract services for— 
‘‘(i) with respect to retail community 
pharmacies, the determination on a month-
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS
ly basis of retail survey prices of the na-
tional average drug acquisition cost for 
covered outpatient drugs for such phar-
macies, net of all discounts and rebates (to 
the extent any information with respect to 
such discounts and rebates is available), 
the average reimbursement received for 
such drugs by such pharmacies from all 
sources of payment, including third par-
ties, and, to the extent available, the usual 
and customary charges to consumers for 
such drugs; and’’; 
(B) by adding at the end of paragraph (1) 
the following: 
‘‘(F) SURVEY
REPORTING.—In order to 
meet the requirement of section 1902(a)(54), a 
State shall require that any retail community 
pharmacy in the State that receives any pay-
ment, administrative fee, discount, or rebate re-
lated to the dispensing of covered outpatient 
drugs to individuals receiving benefits under 
this title, regardless of whether such payment, 
fee, discount, or rebate is received from the 
State or a managed care entity directly or from 
a pharmacy benefit manager or another entity 
VerDate Sep 11 2014 
23:41 Dec 06, 2019
Jkt 099200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5281.IH
H5281
kjohnson on DSK79L0C42 with BILLS