I 112th CONGRESS 1st Session H. R. 3342 IN THE HOUSE OF REPRESENTATIVES November 3, 2011 Mr. Bass of New Hampshire (for himself, Mrs. Emerson, and Mr. Welch) 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 encourage States to increase generic drug utilization under Medicaid.

1.

Short title

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

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)).

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.