To amend title XI of the Social Security Act to clarify that the Secretary of Health and Human Services has the authority to treat certain State payments made in an approved demonstration project as medical assistance under the Medicaid Program for purposes of a rebate agreement under section 1927 of the Social Security Act, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State Prescription Drug Flexibility 
Act of 2001''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) Access to prescription drugs is important to all 
        Americans.
            (2) Many low-income individuals cannot afford to purchase 
        the drugs prescribed by their doctors. Others skip doses or 
        split pills contrary to their doctor's orders because they 
        cannot afford to refill their prescriptions.
            (3) Low-income individuals who use their limited financial 
        resources to obtain needed drugs may do so by foregoing other 
        expenditures important to their health and well-being.
            (4) One of the objectives of the medicaid program set forth 
        in section 1901 of the Social Security Act (42 U.S.C. 1396) is 
        to enable each State, as far as practicable under the 
        conditions in such State, to provide medical assistance on 
        behalf of families with dependent children and of aged, blind, 
        or disabled individuals, whose income and resources are 
        insufficient to meet the costs of necessary medical services.
            (5) As part of carrying out this objective, every State has 
        elected the option of providing prescription drugs as a benefit 
        under the medicaid program, thereby providing an important 
        means of increasing the access of low-income individuals to 
        drugs prescribed by their doctors.
            (6) Section 1115 of the Social Security Act (42 U.S.C. 
        1315) provides the Secretary of Health and Human Services with 
        broad authority to--
                    (A) approve any experimental, pilot, or 
                demonstration project which, in the judgment of the 
                Secretary, is likely to assist in promoting the 
                objectives of the medicaid program; and
                    (B) waive compliance with any of the State plan 
                requirements of the medicaid program under section 1902 
                of the Social Security Act (42 U.S.C. 1396a), including 
                paragraphs (14) (relating to limitations on cost 
                sharing under section 1916 of that Act (42 U.S.C. 
                1396o)) and (54) (relating to applicable requirements 
                of section 1927 of that Act (42 U.S.C. 1396r-8)), in 
                order to conduct such a project.
            (7) Medicaid demonstration projects help promote the 
        objectives of the medicaid program, including obtaining 
        information about options for increasing access to prescription 
        drugs for low-income individuals.
            (8) Both Maine and Vermont have, with the approval of the 
        Secretary of Health and Human Resources, implemented 
        demonstration projects to expand access to prescription drugs 
        under the medicaid program. Thousands of individuals with no 
        other prescription drug insurance benefits are enrolled in 
        those programs.
            (9) Terminating medicaid demonstration projects prior to 
        their planned expiration dates may result in a significant 
        waste of public funds and may be detrimental to those 
        individuals who have come to rely on such projects.

SEC. 3. CLARIFICATION OF SECRETARIAL AUTHORITY WITH RESPECT TO 
              TREATMENT OF CERTAIN PAYMENTS MADE IN AN APPROVED 
              DEMONSTRATION PROJECT.

    (a) In General.--Section 1115 of the Social Security Act (42 U.S.C. 
1315) is amended by adding at the end the following:
    ``(g) Notwithstanding any other provision of law, with respect to 
any experimental, pilot, or demonstration project conducted by a State 
that was approved by the Secretary under subsection (a) prior to 
January 31, 2001, and that waives compliance with, or makes 
inapplicable, certain requirements of section 1902 for the purposes of 
establishing an outpatient prescription drug program for residents of 
the State who are not otherwise eligible for medical assistance under 
title XIX--
            ``(1) any expenditures, payments, or outlays by the State 
        for covered outpatient drugs under the project shall be treated 
        as payments made under the State plan under title XIX for 
        covered outpatient drugs defined in section 1927(k)(2) for 
        purposes of a rebate agreement under section 1927, regardless 
        of whether such expenditures, payments, or outlays of the State 
        are offset or reimbursed, in whole or in part, by rebates 
        received under such an agreement;
            ``(2) any such expenditures, payments, or outlays by the 
        State are consistent with the objectives of the medicaid 
        program set forth in section 1901;
            ``(3) any such expenditures, payments, or outlays by the 
        State shall be considered amounts expended for medical 
        assistance in the form of prescribed drugs, as defined in 
        section 1905(a)(12), under the State plan under title XIX; and
            ``(4) the requirements of section 1916 shall not apply with 
        respect to any enrollment fees, premiums, deductions, 
        copayments, cost sharing, or similar charges imposed upon 
        individuals participating in such project.''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on the date of enactment of this Act and applies to State 
expenditures, payments, or outlays under an experimental, pilot, or 
demonstration project described in section 1115(g) of the Social 
Security Act (as added by subsection (a)) made before, on, or after 
such date.

Summary: Access to Affordable Prescription Drugs Act of 2001 - Amends title XI of the Social Security Act (SSA) with respect to any State-conducted demonstration project approved by the Secretary of Health and Human Services before January 1, 2001, that waives compliance with, or makes inapplicable, certain State plan requirements for establishing an outpatient prescription drug program for residents of the State not otherwise eligible for medical assistance under Medicaid (SSA title XIX). Provides that any expenditures by the State for covered outpatient drugs under the demonstration project will be treated as payments under the State Medicaid plan for covered outpatient drugs for purposes of a rebate agreement, regardless of whether such expenditures are offset or reimbursed, in whole or in part, by rebates received under such an agreement. States that such expenditures are consistent with the objectives of the Medicaid program and are to be considered amounts expended for medical assistance in the form of prescribed drugs under the State Medicaid plan. Makes certain Medicaid requirements inapplicable to any enrollment fees, premiums, deductions, copayments, cost sharing, or similar charges imposed upon individuals participating in the demonstration project.