To amend title XIX of the Social Security Act to encourage States to increase generic drug utilization under Medicaid.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Affordable Medicines Utilization Act 
of 2011''.

SEC. 2. SAVINGS REBATE FOR STATES THAT INCREASE GENERIC DRUG 
              UTILIZATION UNDER MEDICAID.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended by inserting after subsection (g) the following:
    ``(h)(1) With respect to each of fiscal years 2012, 2013, and 2014, 
if the generic substitution rate determined for the State under section 
1927(l)(2) for the most recent preceding fiscal year for which data are 
available is greater than the State's generic substitution rate (as so 
determined) for the second most recent preceding fiscal year for which 
data are available, the amount determined under subsection (a)(1) for 
the State for each quarter of the fiscal year shall be increased by an 
amount equal to 50 percent of the generic drug utilization savings 
amount determined for the State and the quarter under paragraph (2).
    ``(2) The generic drug utilization savings amount determined under 
this paragraph with respect to a State and a quarter is the product 
of--
            ``(A) the difference between the--
                    ``(i) total amount expended by the State for the 
                corresponding quarter of the preceding fiscal year for 
                providing medical assistance for multiple source drugs 
                (as defined in section 1927(k)(7)(A)(i)), as determined 
                after the application of section 1927(b)(1)(B); and
                    ``(ii) total amount expended by the State for the 
                quarter involved for providing medical assistance for 
                such drugs (as so determined); and
            ``(B) the State percentage determined for the State under 
        section 1905(b).''.
    (b) Annual Determination of State Generic Substitution Rates and 
Performance Rankings.--Section 1927 of the Social Security Act (42 
U.S.C. 1396r-8) is amended by adding at the end the following:
    ``(l) Annual Determination of State Generic Substitution Rates and 
Performance Rankings.--
            ``(1) In general.--Not later than January 1, 2012, and 
        annually thereafter, the Secretary shall determine the generic 
        substitution rate (as defined in paragraph (2)) for each State 
        for the most recent preceding fiscal year and the second most 
        recent preceding fiscal year for which data are available. The 
        Secretary annually shall publish on the Internet Web site of 
        the Centers for Medicare & Medicaid Services the generic 
        substitution rates determined for each State for such preceding 
        fiscal years and, with respect to a State, the percentage 
        increase or decrease in such rates when compared with each 
        other. On the basis of such comparison, the Secretary shall 
        list the States in order of the States with the greatest 
        increase in the generic substitution rate.
            ``(2) Generic substitution rate.--In paragraph (1), the 
        term `generic substitution rate' means, with respect to a 
        State, the share of all drug units for which payment is made to 
        the State under this title for the 20 most widely prescribed 
        multiple source drugs under the State program under this title 
        that have a specific National Drug Code and meet the 
        requirements of subsection (k)(7)(A)(i).''.
    (c) Evaluation and Report.--
            (1) In general.--Not later than December 31, 2014, the 
        Secretary of Health and Human Services shall evaluate and 
        report to Congress on the effectiveness of the generic drug 
        utilization savings payments authorized under section 1903(h) 
        of the Social Security Act (42 U.S.C. 1396b(h)) (as added by 
        subsection (a)) in encouraging States to increase their 
        Medicaid generic substitution rate. The evaluation shall 
        include the following:
                    (A) An analysis of the amounts each State Medicaid 
                program saves through increased generic drug 
                substitution.
                    (B) An analysis of any indirect savings to State 
                Medicaid programs through increased medication 
                adherence due to increased accessibility and 
                affordability of prescriptions.
                    (C) An analysis of future estimated savings to 
                State Medicaid programs and the Federal Government 
                after termination of the generic drug utilization 
                savings payments authorized under such section.
            (2) Medicaid generic substitution rate.--In paragraph (1), 
        the term ``Medicaid generic substitution rate'' has the meaning 
        given the term ``generic substitution rate'' under section 
        1927(l)(2) of the Social Security Act (42 U.S.C. 1396r-8(l)(2)) 
        (as added by subsection (b)).

SEC. 3. INNOVATIVE HEALTH CARE SAVINGS PROGRAM.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended by adding at the end the following:
    ``(aa) Innovative Health Care Savings Program.--
            ``(1) In general.--In addition to the payments provided 
        under subsection (a), subject to paragraph (5), the Secretary 
        shall provide for payments to eligible States for the 
        implementation of programs to achieve reductions in 
        expenditures under this title or under title XVIII.
            ``(2) Eligible state.--A State is eligible for a payment 
        under this subsection if the State achieves a generic 
        substitution rate (as determined under section 1927(l)(2)) of 
        at least 92 percent.
            ``(3) Use of funds.--A State may only use funds received 
        through a payment under this subsection to implement programs 
        to achieve reductions in expenditures under this title or title 
        XVIII (such as innovative approaches to cost savings and health 
        care delivery).
            ``(4) Application, terms, and conditions.--
                    ``(A) Application.--No payments shall be made to a 
                State under this subsection unless the State applies to 
                the Secretary for such payments in a form, manner, and 
                time specified by the Secretary and such application is 
                approved by the Secretary.
                    ``(B) Terms and conditions.--Payments made under 
                this subsection are made under such terms and 
                conditions consistent with this subsection as the 
                Secretary prescribes.
            ``(5) Funding.--
                    ``(A) Limitation.--The total amount of payments 
                under this subsection for a quarter shall not exceed 5 
                percent of the sum of the generic drug utilization 
                savings amount (as determined under subsection (h)(2)) 
                for all States for the quarter. This subsection 
                constitutes budget authority in advance of 
                appropriations Acts and represents the obligation of 
                the Secretary to provide for the payment of amounts 
                provided under this subsection.
                    ``(B) Allocation of funds.--The Secretary shall 
                specify a method for allocating the funds made 
                available under this subsection among eligible States.
                    ``(C) Form and manner of payment.--Payment to an 
                eligible State under this subsection shall be made in 
                the same manner as other payments under section 
                1903(a). There is no requirement for State matching 
                funds to receive payments under this subsection.''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective for quarters beginning on or after the date of enactment of 
this Act.

Summary: Affordable Medicines Utilization Act of 2011 - Amends title XIX (Medicaid) of the Social Security Act (SSA), with respect to FY2012-FY2014, to require an increase in the quarterly Medicaid payment to a state by 50% of the generic drug utilization savings amount if the state's generic substitution rate for the most recent preceding fiscal year for which data is available is greater than its rate for the most recent second preceding fiscal year for which data is available.

Directs the Secretary of Health and Human Services (HHS) to determine the state's generic substitution rate for such fiscal years.

Defines "generic substitution rate" as the share of all drug units for which Medicaid payment is made to a state for the 20 most widely prescribed multiple source drugs under the state program that have a specific National Drug Code.

Directs the Secretary to provide for payments to eligible states for implementation of programs to achieve reductions in expenditures under Medicaid or under SSA title XVIII (Medicare) (innovative health care savings program).