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 organizations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drug Rebate Equalization Act of 
2009''.

SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES OF 
              MEDICAID MANAGED CARE ORGANIZATIONS.

    (a) In General.--Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) 
is amended--
            (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 dispensed 
                        to individuals eligible for medical assistance 
                        who are enrolled with the entity shall be 
                        subject to the same rebate required by the 
                        agreement entered into under section 1927 as 
                        the State is subject to, and (II) capitation 
                        rates paid to the entity shall be based on 
                        actual cost experience related to rebates and 
                        subject to the Federal regulations requiring 
                        actuarially sound rates.''.
    (b) Conforming Amendments.--Section 1927 (42 U.S.C. 1396r-8) is 
amended--
            (1) in subsection (d)--
                    (A) in paragraph (1), by adding at the end the 
                following:
                    ``(C) Notwithstanding the subparagraphs (A) and 
                (B)--
                            ``(i) a Medicaid managed care organization 
                        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 organization, such 
                        as those affecting utilization management, 
                        formulary adherence, and cost sharing or 
                        dispute resolution, in lieu of any State 
                        policies or practices relating to the exclusion 
                        or restriction of coverage of such drugs, 
                        provided, however, that any such exclusions and 
                        restrictions of coverage shall be subject to 
                        any contractual requirements and oversight by 
                        the State as contained in the Medicaid managed 
                        care organization's contract with the State, 
                        and the State shall maintain approval authority 
                        over the formulary used by the Medicaid managed 
                        care organization; and
                            ``(ii) nothing in this section or paragraph 
                        (2)(A)(xiii) of section 1903(m) shall be 
                        construed as requiring a Medicaid managed care 
                        organization with a contract under such section 
                        to maintain the same such policies and 
                        practices as those established by the State for 
                        purposes of individuals who receive medical 
                        assistance for covered outpatient drugs on a 
                        fee-for-service basis.''; and
                    (B) in paragraph (4), by inserting after 
                subparagraph (E) the following:
                    ``(F) Notwithstanding the preceding subparagraphs 
                of this paragraph, any formulary established by 
                Medicaid managed care organization with a contract 
                under section 1903(m) may be based on 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:
            ``(1) Covered outpatients drugs are not subject to the 
        requirements of this section if such drugs are--
                    ``(A) dispensed by health maintenance 
                organizations, 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) Reports.--Each State with a contract with a Medicaid managed 
care organization under section 1903(m) of the Social Security Act (42 
U.S.C. 1396b(m)) shall report to the Secretary on a quarterly basis the 
total amount of rebates in dollars and volume received from 
manufacturers (as defined in section 1927(k)(5) of such Act (42 U.S.C. 
1396r-8(k)(5)) for drugs provided to individuals enrolled with such an 
organization as a result of the amendments made by this section for 
both brand-name and generic drugs. The Secretary shall review the 
reports submitted by States under this subsection and, after such 
review, make publically available the aggregate data contained in such 
reports.
    (d) Effective Date.--This section and the amendments made by this 
section take effect on the date of 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.

Summary: Drug Rebate Equalization Act of 2009 - Amends title XIX (Medicaid) of the Social Security Act to reduce the costs of prescription drugs for enrollees of Medicaid managed care organizations by extending to such organizations the discounts offered under fee-for-service Medicaid plans.

Requires the state contract with a Medicaid managed care organization to require that payment for covered outpatient drugs dispensed to Medicaid-eligible individuals enrolled with the organization be subject to the same rebate as the state is subject to.

Requires also that capitation rates paid to the organization be: (1) based on actual cost experience related to rebates; and (2) subject to the federal regulations requiring actuarially sound rates.