SEC. 2. OPTIONAL STATE PRESCRIPTION DISCOUNT PRO-
GRAM. 
(a) IN GENERAL.—Section 1927(a) of the Social Se-
curity Act (42 U.S.C. 1396r–8(a)), as amended by section 
6002(a) of the Deficit Reduction Act of 2005 (Public Law 
109–171), is amended by adding at the end the following: 
‘‘(8) REQUIREMENTS
RELATING
TO
AGREE-
MENTS
FOR
DRUGS
PROCURED
BY
INDIVIDUALS 
THROUGH
OPTIONAL
STATE
PRESCRIPTION
DRUG 
DISCOUNT PROGRAMS.— 
‘‘(A) IN GENERAL.—A manufacturer meets 
the requirements of this paragraph if the manu-
facturer enters into an agreement with the 
State to make rebate payments for drugs cov-
ered by a State prescription drug discount pro-
gram in the same amounts as are paid by the 
manufacturer to the State for such drugs under 
a rebate agreement described in subsection (b). 
The previous sentence shall only apply to a 
State that has elected to establish an optional 
State prescription drug discount program and 
to apply the provisions of such sentence. 
‘‘(B) 
OPTIONAL
STATE
PRESCRIPTION 
DRUG DISCOUNT PROGRAM DEFINED.— 
‘‘(i) IN GENERAL.—In this paragraph, 
the term ‘optional State prescription drug 
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discount program’ means a State program 
under which, with respect to a rebate pe-
riod, not less than the amount equal to 95 
percent of all the rebates paid to the State 
under agreements entered into under sub-
paragraph (A) during such period is pro-
vided to eligible State residents in the form 
of discounted prices for the purchase of 
outpatient prescription drugs. 
‘‘(ii) ELIGIBLE
STATE
RESIDENT.— 
For purposes of clause (i), the term ‘eligi-
ble State resident’ means an individual 
who is a State resident and whose income 
does not exceed a percentage (specified 
under the optional State prescription drug 
discount program, but not to exceed 300 
percent) of the income official poverty line 
(as defined by the Office of Management 
and Budget, and revised annually in ac-
cordance with section 673(2) of the Omni-
bus Budget Reconciliation Act of 1981) 
applicable to a family of the size involved. 
‘‘(iii) ADDITIONAL SUBSIDIES.—Noth-
ing in this subparagraph shall be construed 
as— 
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‘‘(I) requiring a State to expend 
State funds to carry out a State pre-
scription drug discount program; or 
‘‘(II) prohibiting a State from 
electing to contribute State funds to a 
State prescription drug discount pro-
gram to provide greater subsidies to 
eligible State residents for outpatient 
prescription drugs covered under the 
program. 
‘‘(iv) NO SECTION 1115 WAIVER RE-
QUIRED TO IMPLEMENT.—Nothing in this 
subparagraph shall be construed as requir-
ing a State to obtain a waiver under sec-
tion 1115 or otherwise of any requirement 
of this title to implement an optional State 
prescription drug discount program. 
‘‘(C) NO
OFFSET
AGAINST
MEDICAL
AS-
SISTANCE.—Amounts received by a State under 
an agreement entered into under subparagraph 
(A) in any quarter shall not be considered to be 
a reduction in the amount expended under the 
State plan in the quarter for medical assistance 
for purposes of section 1903(a)(1).’’. 
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(b) CONFORMING AMENDMENT.—The first sentence 
of section 1927(a)(1) of such Act (42 U.S.C. 1396r– 
8(a)(1)) is amended, by striking ‘‘and paragraph (6)’’ and 
inserting ‘‘, paragraph (6), and paragraph (8)’’. 
Æ 
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