Teacher:In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
Teacher: Now, understand the problem? Solve this instance: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Fair Medicaid Drug Payment Act of
2007''.

SEC. 2. PROVIDING ADEQUATE PHARMACY REIMBURSEMENT UNDER MEDICAID.

(a) Pharmacy Reimbursement Limits.--
(1) In general.--Section 1927(e) of the Social Security Act
(42 U.S.C. 1396r-8(e)) is amended--
(A) in paragraph (4), by striking ''(or, effective
January 1, 2007, two or more)''; and
(B) by striking paragraph (5) and inserting the
following:
''(5) Use of amp in upper payment limits.--The Secretary
shall calculate the Federal upper reimbursement limit
established under paragraph (4) as no less than 300 percent of
the weighted average (determined on the basis of utilization)
of the most recent average manufacturer prices for
pharmaceutically and therapeutically equivalent multiple source
drug products that are available for purchase by retail
community pharmacies on a nationwide basis. The Secretary shall
implement a smoothing process for average manufacturer prices
to ensure that Federal upper reimbursement limits do not vary
significantly from month to month as a result of rebates,
discounts, and other pricing practices. Such process shall be
similar to the smoothing process used in determining the
average sales price of a drug or biological under section
1847A.''.
(2) Definition of amp.--Section 1927(k)(1) of such Act (42
U.S.C. 1396r-8(k)(1)) is amended--
(A) in subparagraph (A), by striking ''by'' and all
that follows through the period and inserting ''by--
''(i) wholesalers for drugs distributed to
retail community pharmacies; and
''(ii) retail community pharmacies that
purchase drugs directly from the
manufacturer.''; and
(B) in subparagraph (B)--
(i) in the subparagraph heading, by
striking ''extended to wholesalers'' and
inserting ''and other payments''; and
(ii) by striking ''regard to'' and all that
follows through the period and inserting
''regard to--
''(i) customary prompt pay discounts
extended to wholesalers;
''(ii) bona fide service fees paid by
manufacturers to wholesalers or retail
community pharmacies, including (but not
limited to) distribution service fees,
inventory management fees, product stocking
allowances, and fees associated with
administrative services agreements and patient
care programs (such as medication compliance
programs and patient education programs);
''(iii) reimbursement by manufacturers for
recalled, damaged, expired, or otherwise
unsalable returned goods, including (but not
limited to) reimbursement for the cost of the
goods and any reimbursement of costs associated
with return goods handling and processing,
reverse logistics, and drug destruction;
''(iv) payments received from, and rebates
or discounts provided to, pharmacy benefit
managers, managed care organizations, health
maintenance organizations, insurers, hospitals,
clinics, mail order pharmacies, long term care
providers, manufacturers, or any other entity
that does not conduct business primarily as a
wholesaler or a retail community pharmacy;
''(v) any payments made by manufacturers
that are associated with drugs dispensed by
retail community pharmacies; and
''(vi) any other discounts, rebates,
payments, or other financial transactions that
are not received by, paid by, or passed through
to, retail community pharmacies.''.
(3) Definition of multiple source drug.--Section
1927(k)(7)(A)(i) of such Act (42 U.S.C. 1396r-8(k)(7)(A)(i)) is
amended--
(A) in the matter preceding subclause (I), by
striking ''there at least 1 other drug product'' and
inserting ''there are at least 2 other drug products'';
and
(B) in subclauses (I), (II), and (III), by striking
''is'' each place it appears and inserting ''are''.
(4) Definitions of retail community pharmacy; wholesaler.--
Section 1927(k) of such Act (42 U.S.C. 1396r-8(k)) is amended
by adding at the end the following new paragraphs:
''(10) Retail community pharmacy.--The term 'retail
community pharmacy' means a traditional independent pharmacy,
traditional chain pharmacy, a supermarket pharmacy, or a mass
merchandiser pharmacy that is licensed as a pharmacy by a State
and that dispenses medications to the general public at retail
prices. Such term does not include a pharmacy that dispenses
prescription medications to patients primarily through the
mail, nursing home pharmacies, long-term care facility
pharmacies, hospital pharmacies, clinics, charitable or not-
for-profit pharmacies, government pharmacies, or pharmacy
benefit managers.
''(11) Wholesaler.--The term 'wholesaler' means a drug
wholesaler that is licensed as a wholesaler by a State and that
is engaged in wholesale distribution of prescription drugs to
retail community pharmacies, including (but not limited to)
manufacturers, repackers, own-label distributors, private-label
distributors, jobbers, brokers, warehouses (including
manufacturer's and distributor's warehouses, chain drug
warehouses, and wholesale drug warehouses) independent
wholesale drug traders, and retail pharmacies that conduct
wholesale distributions.''.
(b) Requirements of Prior Authorization Programs.--Section
1927(d)(5) of such Act (42 U.S.C. 1396r-8(d)(5)) is amended--
(1) in the matter preceding subparagraph (A), by striking
''of the drug before its dispensing for any medically accepted
indication (as defined in subsection (k)(6)) only if the system
providing for such approval'' and inserting ''by the State of
the use of the drug before its dispensing for any medically
accepted indication (as defined in subsection (k)(6)). A State
plan under this title shall, as a condition of coverage or
payment for a covered outpatient drug for which Federal
financial participation is available in accordance with this
section, subject to prior authorization all covered outpatient
drug products that are innovator multiple source drugs if such
drug products are more expensive than other biologically and
therapeutically equivalent drug products that are available for
purchase in that State by retail community pharmacies. The
system providing for such approval shall'';
(2) in each of subparagraphs (A) and (B), by striking
''provides'' and inserting ''provide'';
(3) by redesignating subparagraphs (A) and (B) (as so
amended) as subparagraphs (C) and (D), respectively; and
(4) by inserting before subparagraph (C) (as so
redesignated), the following new subparagraphs:
''(A) require the prescriber to request prior
authorization by substantiating the medical necessity
of dispensing the covered outpatient drug as opposed to
dispensing a substitute covered outpatient drug;
''(B) require that a prior authorization number
assigned to the approved request by the State be
included on the order for the covered outpatient drug
issued by the prescriber or relayed to the dispensing
pharmacist by the prescriber if the prescription is
orally transmitted;''.
(c) Disclosure of Price Information to the Public.--Section
1927(b)(3) of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), in the matter preceding
subclause (I), by inserting ''month of a'' after
''each''; and
(B) in the last sentence, by striking ''and
shall,'' and all that follows through the period; and
(2) in subparagraph (D)--
(A) in clause (iii), by inserting ''and'' after the
comma;
(B) in clause (iv), by striking '', and'' and
inserting a period; and
(C) by striking clause (v).
(d) Technical Amendment.--Section 1927(d)(1) of such Act (42 U.S.C.
1396r-8(d)(1)) is amended in the paragraph heading by inserting ''and
mandatory'' after ''permissible''.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect as if
included in the enactment of the Deficit Reduction Act of 2005
(Public Law 109-171).
(2) Exception.--The amendments made by subsection (b) shall
take effect on the date that is 180 days after the date of
enactment of this Act.
Student:
Fair Medicaid Drug Payment Act of 2007 - Amends title XIX (Medicaid) of the Social Security Act to direct the Secretary of Health and Human Services to calculate the federal upper reimbursement limit as no less than 300% of the weighted average (based on utilization) of the most recent average manufacturer prices (AMPs) for pharmaceutically and therapeutically equivalent multiple source drug products available for purchase by retail community pharmacies on a nationwide basis. Directs the Secretary to implement a smoothing process for AMPs to ensure that federal upper reimbursement limits do not vary significantly from month to month as a result of rebates, discounts, and other pricing practices.

Requires a state plan to subject to prior authorization all covered outpatient drug products that are innovator multiple source drugs, if such drug products are more expensive than other biologically and therapeutically equivalent drug products available for purchase in that state by retail community pharmacies.

Revises requirements for monthly reports to the Secretary of price information by manufacturers subject to rebate agreements.