Title: Drug Price Transparency in Medicaid Act of 2019
Policy area: Health

Summary:
Drug Price Transparency in Medicaid Act of 2019
This bill requires pass-through pricing models, and prohibits spread-pricing, for payment arrangements with pharmacy benefit managers under Medicaid. The bill also extends funding for retail pharmacy surveys and requires additional information with respect to price concessions, dispensing fees, and survey participation to be made publicly available.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5281 Introduced in House (IH)]

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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. Cardenas) 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 pricing and related practices in 
                         the Medicaid program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drug Price Transparency in Medicaid 
Act of 2019''.

SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE USE OF ABUSIVE SPREAD 
              PRICING AND RELATED PRACTICES IN MEDICAID.

    (a) Pass-Through Pricing Required.--
            (1) In general.--Section 1927(e) of the Social 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 provisions 
        making the entity responsible for coverage of covered 
        outpatient drugs dispensed to individuals enrolled 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 
                                professional dispensing fee that the 
                                State plan or waiver would pay if the 
                                plan or waiver was making the payment 
                                directly;
                            ``(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 
                        consistent 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 requirements 
                        applied directly to the entity or the PBM;
                    ``(B) payment to the entity or the PBM (as 
                applicable) for administrative services performed 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 Secretary upon 
                request, all costs and payments related to covered 
                outpatient drugs and accompanying administrative 
                services incurred, received, or made by the entity or 
                the PBM, including ingredient costs, professional 
                dispensing fees, administrative fees, post-sale and 
                post-invoice 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 assessments (after allowing for a reasonable 
                administrative 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 behalf of the entity under 
                a contract or other arrangement between the entity and 
                the pharmacy benefit manager, shall comply with the 
                requirements 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 following:
            ``(1) Survey of retail prices.--The Secretary 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 monthly 
                        basis of retail survey prices of the national 
                        average drug acquisition cost for covered 
                        outpatient drugs for such pharmacies, 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 parties, 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 payment, administrative fee, 
                discount, or rebate related 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 that has a 
                contract with the State or a managed care entity, shall 
                respond to surveys of retail prices conducted under 
                this subsection.
                    ``(G) Survey information.--Information on retail 
                community prices obtained under this paragraph shall be 
                made publicly available and shall include at least the 
                following:
                            ``(i) The monthly response rate of the 
                        survey including a list of pharmacies not in 
                        compliance with subparagraph (F).
                            ``(ii) The sampling frame and number of 
                        pharmacies sampled monthly.
                            ``(iii) Characteristics of reporting 
                        pharmacies, including type (such as independent 
                        or chain), geographic or regional location, and 
                        dispensing volume.
                            ``(iv) Reporting of a separate national 
                        average drug acquisition cost for each drug for 
                        independent retail pharmacies and chain 
                        operated pharmacies.
                            ``(v) Information on price concessions 
                        including on and off invoice discounts, 
                        rebates, and other price concessions.
                            ``(vi) Information on average professional 
                        dispensing fees paid.
                    ``(H) Report on specialty pharmacies.--
                            ``(i) In general.--Not later than 1 year 
                        after the effective date of this subparagraph, 
                        the Secretary shall submit a report to Congress 
                        examining specialty drug coverage and 
                        reimbursement under this title.
                            ``(ii) Content of report.--Such report 
                        shall include a description of how State 
                        Medicaid programs define specialty drugs, how 
                        much State Medicaid programs pay for specialty 
                        drugs, how States and managed care plans 
                        determine payment for specialty drugs, the 
                        settings in which specialty drugs are dispensed 
                        (such as retail community pharmacies or 
                        specialty pharmacies), whether acquisition 
                        costs for specialty drugs are captured in the 
                        national average drug acquisition cost survey, 
                        and recommendations as to whether specialty 
                        pharmacies should be included in the survey of 
                        retail prices to ensure national average drug 
                        acquisition costs capture drugs sold at 
                        specialty pharmacies and how such specialty 
                        pharmacies should be defined.'';
                    (C) in paragraph (2)--
                            (i) in subparagraph (A), by inserting ``, 
                        including payments rates under Medicaid managed 
                        care plans,'' after ``under this title''; and
                            (ii) in subparagraph (B), by inserting 
                        ``and the basis for such dispensing fees'' 
                        before the semicolon; and
                    (D) in paragraph (4), by inserting ``, and 
                $5,000,000 for fiscal year 2020 and each fiscal year 
                thereafter,'' after ``2010''.
            (2) Effective date.--The amendments made by this subsection 
        take effect on the first day of the first quarter that begins 
        on or after the date that is 18 months after the date of 
        enactment of this Act.
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