[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5882 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 5882

 To amend title XIX of the Social Security Act to provide States with 
  the option under the Medicaid program to pay for covered outpatient 
   drugs through risk-sharing value-based agreements, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 12, 2020

  Mr. Schrader (for himself, Mr. Marshall, Mr. Crow, Mr. Mullin, Mr. 
  Bera, Mr. Kelly of Pennsylvania, and Mr. Schweikert) 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 provide States with 
  the option under the Medicaid program to pay for covered outpatient 
   drugs through risk-sharing value-based agreements, and for other 
                               purposes.

    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 ``Generating Effective and Novel 
Evidence for Therapy Payment Act'' or ``GENE Therapy Payment Act''.

SEC. 2. RISK-SHARING VALUE-BASED PAYMENT AGREEMENTS FOR COVERED 
              OUTPATIENT DRUGS UNDER MEDICAID.

    (a) In General.--Section 1927 of the Social Security Act (42 U.S.C. 
1396r-8) is amended by adding at the end the following new subsection:
    ``(l) State Option To Pay for Covered Outpatient Drugs Through 
Risk-Sharing Value-Based Agreements.--
            ``(1) In general.--Beginning January 1, 2022, a State shall 
        have the option to pay (whether on a fee-for-service or managed 
        care basis) for covered outpatient drugs that are potentially 
        curative treatments intended for one-time use that are 
        administered to individuals under this title by entering into a 
        risk-sharing value-based payment agreement with the 
        manufacturer of the drug in accordance with the requirements of 
        this subsection.
            ``(2) Secretarial approval.--
                    ``(A) In general.--A State shall submit a request 
                to the Secretary to enter into a risk-sharing value-
                based payment agreement, and the Secretary shall not 
                approve a proposed risk-sharing value-based payment 
                agreement between a State and a manufacturer for 
                payment for a covered outpatient drug of the 
                manufacturer unless the following requirements are met:
                            ``(i) Manufacturer has in effect a rebate 
                        agreement and is in compliance with all 
                        applicable requirements.--The manufacturer has 
                        a rebate agreement in effect as required under 
                        subsections (a) and (b) of this section and is 
                        in compliance with all applicable requirements 
                        under this title.
                            ``(ii) No increase to projected net federal 
                        spending.--
                                    ``(I) In general.--The Chief 
                                Actuary certifies that the projected 
                                payments for each covered outpatient 
                                drug under a proposed risk-sharing 
                                value-based payment agreement is not 
                                expected to result in greater estimated 
                                Federal spending under this title than 
                                the net Federal spending that would 
                                result in the absence of such 
                                agreement.
                                    ``(II) Net federal spending 
                                defined.--For purposes of this 
                                subsection, the term `net Federal 
                                spending' means the amount of Federal 
                                payments the Chief Actuary estimates 
                                would be made under this title for 
                                administering a covered outpatient drug 
                                to an individual eligible for medical 
                                assistance under a State plan or a 
                                waiver of such plan, reduced by the 
                                amount of all rebates the Chief Actuary 
                                estimates would be paid with respect to 
                                the administering of such drug, 
                                including all rebates under this title 
                                and any supplemental or other 
                                additional rebates, in the absence of 
                                such an agreement.
                                    ``(III) Information.--The Chief 
                                Actuary shall make the certifications 
                                required under this clause based on the 
                                most recently available and reliable 
                                drug pricing and product information. 
                                The State and manufacturer shall 
                                provide the Secretary and the Chief 
                                Actuary with all necessary information 
                                required to make the estimates needed 
                                for such certifications.
                            ``(iii) Launch and list price 
                        justifications.--The manufacturer submits all 
                        relevant information and supporting 
                        documentation necessary for pricing decisions 
                        as deemed appropriate by the Secretary, which 
                        shall be truthful and non-misleading, including 
                        manufacturer information and supporting 
                        documentation for launch price or list price 
                        increases, and any applicable justification 
                        required under section 1128L.
                            ``(iv) Confidentiality of information; 
                        penalties.--The provisions of subparagraphs (C) 
                        and (D) of subsection (b)(3) shall apply to a 
                        manufacturer that fails to submit the 
                        information and documentation required under 
                        clauses (ii) and (iii) on a timely basis, or 
                        that knowingly provides false or misleading 
                        information, in the same manner as such 
                        provisions apply to a manufacturer with a 
                        rebate agreement under this section.
                    ``(B) Consideration of state request for 
                approval.--
                            ``(i) In general.--The Secretary shall 
                        treat a State request for approval of a risk-
                        sharing value-based payment agreement in the 
                        same manner that the Secretary treats a State 
                        plan amendment, and subpart B of part 430 of 
                        title 42, Code of Federal Regulations, 
                        including, subject to clause (ii), the timing 
                        requirements of section 430.16 of such title 
                        (as in effect on the date of enactment of this 
                        subsection), shall apply to a request for 
                        approval of a risk-sharing value-based payment 
                        agreement in the same manner as such subpart 
                        applies to a State plan amendment.
                            ``(ii) Timing.--The Secretary shall consult 
                        with the Commissioner of Food and Drugs as 
                        required under subparagraph (C) and make a 
                        determination on whether to approve a request 
                        from a State for approval of a proposed risk-
                        sharing value-based payment agreement (or 
                        request additional information necessary to 
                        allow the Secretary to make a determination 
                        with respect to such request for approval) 
                        within the time period, to the extent 
                        practicable, specified in section 430.16 of 
                        title 42, Code of Federal Regulations (as in 
                        effect on the date of enactment of this 
                        subsection), but in no case shall the Secretary 
                        take more than 180 days after the receipt of 
                        such request for approval or response to such 
                        request for additional information to make such 
                        a determination (or request additional 
                        information).
                    ``(C) Consultation with the commissioner of food 
                and drugs.--In considering whether to approve a risk-
                sharing value-based payment agreement, the Secretary, 
                to the extent necessary, shall consult with the 
                Commissioner of Food and Drugs to determine whether the 
                relevant clinical parameters specified in such 
                agreement are appropriate.
            ``(3) Installment-based payment structure.--
                    ``(A) In general.--A risk-sharing value-based 
                payment agreement shall provide for a payment structure 
                under which, for every installment year of the 
                agreement (subject to subparagraph (B)), the State 
                shall pay the total installment year amount in equal 
                installments to be paid at regular intervals over a 
                period of time that shall be specified in the 
                agreement.
                    ``(B) Requirements for installment payments.--
                            ``(i) Timing of first payment.--The State 
                        shall make the first of the installment 
                        payments described in subparagraph (A) for an 
                        installment year not later than 30 days after 
                        the end of such year.
                            ``(ii) Length of installment period.--The 
                        period of time over which the State shall make 
                        the installment payments described in 
                        subparagraph (A) for an installment year shall 
                        not be longer than 5 years.
                            ``(iii) Nonpayment or reduced payment of 
                        installments following a failure to meet 
                        clinical parameter.--If, prior to the payment 
                        date (as specified in the agreement) of any 
                        installment payment described in subparagraph 
                        (A) or any other alternative date or time frame 
                        (as otherwise specified in the agreement), the 
                        covered outpatient drug which is subject to the 
                        agreement fails to meet a relevant clinical 
                        parameter of the agreement, the agreement shall 
                        provide that--
                                    ``(I) the installment payment shall 
                                not be made; or
                                    ``(II) the installment payment 
                                shall be reduced by a percentage 
                                specified in the agreement that is 
                                based on the outcome achieved by the 
                                drug relative to the relevant clinical 
                                parameter.
            ``(4) Notice of intent.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                manufacturer of a covered outpatient drug shall not be 
                eligible to enter into a risk-sharing value-based 
                payment agreement under this subsection with respect to 
                such drug unless the manufacturer notifies the 
                Secretary that the manufacturer is interested in 
                entering into such an agreement with respect to such 
                drug. The decision to submit and timing of a request to 
                enter into a proposed risk-sharing value-based payment 
                agreement shall remain solely within the discretion of 
                the State and shall only be effective upon Secretarial 
                approval as required under this subsection.
                    ``(B) Treatment of subsequently approved drugs.--
                            ``(i) In general.--In the case of a 
                        manufacturer of a covered outpatient drug 
                        approved under section 505 of the Federal Food, 
                        Drug, and Cosmetic Act or licensed under 
                        section 351 of the Public Health Service Act 
                        after the date of enactment of this subsection, 
                        not more than 90 days after meeting with the 
                        Food and Drug Administration following phase II 
                        clinical trials for such drug (or, in the case 
                        of a drug described in clause (ii), not later 
                        than March 31, 2022), the manufacturer must 
                        notify the Secretary of the manufacturer's 
                        intent to enter into a risk-sharing value-based 
                        payment agreement under this subsection with 
                        respect to such drug. If no such meeting has 
                        occurred, the Secretary may use discretion as 
                        to whether a potentially curative treatment 
                        intended for one-time use may qualify for a 
                        risk-sharing value-based payment agreement 
                        under this section. A manufacturer notification 
                        of interest shall not have any influence on a 
                        decision for drug approval by the Food and Drug 
                        Administration.
                            ``(ii) Application to certain subsequently 
                        approved drugs.--A drug described in this 
                        clause is a covered outpatient drug of a 
                        manufacturer--
                                    ``(I) that is approved under 
                                section 505 of the Federal Food, Drug, 
                                and Cosmetic Act or licensed under 
                                section 351 of the Public Health 
                                Service Act after the date of enactment 
                                of this subsection; and
                                    ``(II) with respect to which, as of 
                                January 1, 2022, more than 90 days have 
                                passed after the manufacturer's meeting 
                                with the Food and Drug Administration 
                                following phase II clinical trials for 
                                such drug.
                            ``(iii) Parallel approval.--The Secretary, 
                        in coordination with the Administrator of the 
                        Centers for Medicare & Medicaid Services and 
                        the Commissioner of Food and Drugs, shall, to 
                        the extent practicable, approve a State's 
                        request to enter into a proposed risk-sharing 
                        value-based payment agreement that otherwise 
                        meets the requirements of this subsection at 
                        the time that such a drug is approved by the 
                        Food and Drug Administration to help provide 
                        that no State that wishes to enter into such an 
                        agreement is required to pay for the drug in 
                        full at one time if the State is seeking to pay 
                        over a period of time as outlined in the 
                        proposed agreement.
                            ``(iv) Rule of construction.--Nothing in 
                        this paragraph shall be applied or construed to 
                        modify or affect the timeframes or factors 
                        involved in the Secretary's determination of 
                        whether to approve or license a drug under 
                        section 505 of the Federal Food, Drug, and 
                        Cosmetic Act or section 351 of the Public 
                        Health Service Act.
            ``(5) Special payment rules.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, with respect to an individual who is 
                administered a unit of a covered outpatient drug that 
                is reimbursed under a State plan by a State Medicaid 
                agency under a risk-sharing value-based payment 
                agreement in an installment year, the State shall 
                remain liable to the manufacturer of such drug for 
                payment for such unit without regard to whether the 
                individual remains enrolled in the State plan under 
                this title (or a waiver of such plan) for each 
                installment year for which the State is to make 
                installment payments for covered outpatient drugs 
                purchased under the agreement in such year.
                    ``(B) Death.--In the case of an individual 
                described in subparagraph (A) who dies during the 
                period described in such subparagraph, the State plan 
                shall not be liable for any remaining payment for the 
                unit of the covered outpatient drug administered to the 
                individual which is owed under the agreement described 
                in such subparagraph.
                    ``(C) Withdrawal of approval.--In the case of a 
                covered outpatient drug that is the subject of a risk-
                sharing value-based payment agreement between a State 
                and a manufacturer under this subsection, including a 
                drug approved in accordance with section 506(c) of the 
                Federal Food, Drug, and Cosmetic Act, and such drug is 
                the subject of an application that has been withdrawn 
                by the Secretary, the State plan shall not be liable 
                for any remaining payment that is owed under the 
                agreement.
                    ``(D) Alternative arrangement under agreement.--
                Subject to approval by the Secretary, the terms of a 
                proposed risk-sharing value-based payment agreement 
                submitted for approval by a State may provide that 
                subparagraph (A) shall not apply.
                    ``(E) Guidance.--Not later than January 1, 2022, 
                the Secretary shall issue guidance to States 
                establishing a process for States to notify the 
                Secretary when an individual who is administered a unit 
                of a covered outpatient drug that is purchased by a 
                State plan under a risk-sharing value-based payment 
                agreement ceases to be enrolled under the State plan 
                under this title (or a waiver of such plan) or dies 
                before the end of the installment period applicable to 
                such unit under the agreement.
            ``(6) Treatment of payments under risk-sharing value-based 
        agreements for purposes of average manufacturer price; best 
        price.--The Secretary shall treat any payments made to the 
        manufacturer of a covered outpatient drug under a risk-sharing 
        value-based payment agreement under this subsection during a 
        rebate period in the same manner that the Secretary treats 
        payments made under a State supplemental rebate agreement under 
        sections 447.504(c)(19) and 447.505(c)(7) of title 42, Code of 
        Federal Regulations (or any successor regulations) for purposes 
        of determining average manufacturer price and best price under 
        this section with respect to the covered outpatient drug and a 
        rebate period and for purposes of offsets required under 
        subsection (b)(1)(B).
            ``(7) Assessments and report to congress.--
                    ``(A) Assessments.--
                            ``(i) In general.--Not later than 180 days 
                        after the end of each assessment period of any 
                        risk-sharing value-based payment agreement for 
                        a State approved under this subsection, the 
                        Secretary shall conduct an evaluation of such 
                        agreement which shall include an evaluation by 
                        the Chief Actuary to determine whether program 
                        spending under the risk-sharing value-based 
                        payment agreement aligned with the projections 
                        for the agreement made under paragraph 
                        (2)(A)(ii), including an assessment of whether 
                        actual Federal spending under this title under 
                        the agreement was less or more than net Federal 
                        spending would have been in the absence of the 
                        agreement.
                            ``(ii) Assessment period.--For purposes of 
                        clause (i)--
                                    ``(I) the first assessment period 
                                for a risk-sharing value-based payment 
                                agreement shall be the period of time 
                                over which payments are scheduled to be 
                                made under the agreement for the first 
                                10 individuals who are administered 
                                covered outpatient drugs under the 
                                agreement except that such period shall 
                                not exceed the 5-year period after the 
                                date on which the Secretary approves 
                                the agreement; and
                                    ``(II) each subsequent assessment 
                                period for a risk-sharing value-based 
                                payment agreement shall be the 5-year 
                                period following the end of the 
                                previous assessment period.
                    ``(B) Results of assessments.--
                            ``(i) Termination option.--If the Secretary 
                        determines as a result of the assessment by the 
                        Chief Actuary under subparagraph (A) that the 
                        actual Federal spending under this title for 
                        any covered outpatient drug that was the 
                        subject of the State's risk-sharing value-based 
                        payment agreement was greater than the net 
                        Federal spending that would have resulted in 
                        the absence of the agreement, the Secretary may 
                        terminate approval of such agreement and shall 
                        immediately conduct an assessment under this 
                        paragraph of any other ongoing risk-sharing 
                        value-based payment agreement to which the same 
                        manufacturer is a party.
                            ``(ii) Repayment required.--
                                    ``(I) In general.--If the Secretary 
                                determines as a result of the 
                                assessment by the Chief Actuary under 
                                subparagraph (A) that the Federal 
                                spending under the risk-sharing value-
                                based agreement for a covered 
                                outpatient drug that was subject to 
                                such agreement was greater than the net 
                                Federal spending that would have 
                                resulted in the absence of the 
                                agreement, the manufacturer shall repay 
                                the difference to the State and Federal 
                                Governments in a timely manner as 
                                determined by the Secretary.
                                    ``(II) Termination for failure to 
                                pay.--The failure of a manufacturer to 
                                make repayments required under 
                                subclause (I) in a timely manner shall 
                                result in immediate termination of all 
                                risk-sharing value-based agreements to 
                                which the manufacturer is a party.
                                    ``(III) Additional penalties.--In 
                                the case of a manufacturer that fails 
                                to make repayments required under 
                                subclause (I), the Secretary may treat 
                                such manufacturer in the same manner as 
                                a manufacturer that fails to pay 
                                required rebates under this section, 
                                and the Secretary may--
                                            ``(aa) suspend or terminate 
                                        the manufacturer's rebate 
                                        agreement under this section; 
                                        and
                                            ``(bb) pursue any other 
                                        remedy that would be available 
                                        if the manufacturer had failed 
                                        to pay required rebates under 
                                        this section.
                    ``(C) Report to congress.--Not later than 5 years 
                after the first risk-sharing value-based payment 
                agreement is approved under this subsection, the 
                Secretary shall submit to Congress and make available 
                to the public a report that includes--
                            ``(i) an assessment of the impact of risk-
                        sharing value-based payment agreements on 
                        access for individuals who are eligible for 
                        benefits under a State plan or waiver under 
                        this title to medically necessary covered 
                        outpatient drugs and related treatments;
                            ``(ii) an analysis of the impact of such 
                        agreements on overall State and Federal 
                        spending under this title;
                            ``(iii) an assessment of the impact of such 
                        agreements on drug prices, including launch 
                        price and price increases; and
                            ``(iv) such recommendations to Congress as 
                        the Secretary deems appropriate.
            ``(8) Guidance and regulations.--
                    ``(A) In general.--Not later than January 1, 2022, 
                the Secretary shall issue guidance to States seeking to 
                enter into risk-sharing value-based payment agreements 
                under this subsection that includes a model template 
                for such agreements. The Secretary may issue any 
                additional guidance or promulgate regulations as 
                necessary to implement and enforce the provisions of 
                this subsection.
                    ``(B) Model agreements.--
                            ``(i) In general.--If a State expresses an 
                        interest in pursuing a risk-sharing value-based 
                        payment agreement under this subsection with a 
                        manufacturer for the purchase of a covered 
                        outpatient drug, the Secretary may share with 
                        such State any risk-sharing value-based 
                        agreement between a State and the manufacturer 
                        for the purchase of such drug that has been 
                        approved under this subsection. While such 
                        shared agreement may serve as a template for a 
                        State that wishes to propose, the use of a 
                        previously approved agreement shall not affect 
                        the submission and approval process for 
                        approval of a proposed risk-sharing value-based 
                        payment agreement under this subsection, 
                        including the requirements under paragraph 
                        (2)(A).
                            ``(ii) Confidentiality.--In the case of a 
                        risk-sharing value-based payment agreement that 
                        is disclosed to a State by the Secretary under 
                        this subparagraph and that is only in effect 
                        with respect to a single State, the 
                        confidentiality of information provisions 
                        described in subsection (b)(3)(D) shall apply 
                        to such information.
                    ``(C) OIG consultation.--
                            ``(i) In general.--The Secretary shall 
                        consult with the Office of the Inspector 
                        General of the Department of Health and Human 
                        Services to determine whether there are 
                        potential program integrity concerns (including 
                        issues related to compliance with sections 
                        1128B and 1877) with agreement approvals or 
                        templates and address accordingly.
                            ``(ii) OIG policy updates as necessary.--
                        The Inspector General of the Department of 
                        Health and Human Services shall review and 
                        update, as necessary, any policies or 
                        guidelines of the Office of the Inspector 
                        General of the Department of Health and Human 
                        Services (including policies related to the 
                        enforcement of section 1128B) to accommodate 
                        the use of risk-sharing value-based payment 
                        agreements in accordance with this section.
            ``(9) Rules of construction.--
                    ``(A) Modifications.--Nothing in this subsection or 
                any regulations promulgated under this subsection shall 
                prohibit a State from requesting a modification from 
                the Secretary to the terms of a risk-sharing value-
                based payment agreement. A modification that is 
                expected to result in any increase to projected net 
                State or Federal spending under the agreement shall be 
                subject to recertification by the Chief Actuary as 
                described in paragraph (2)(A)(ii) before the 
                modification may be approved.
                    ``(B) Rebate agreements.--Nothing in this 
                subsection shall be construed as requiring a State to 
                enter into a risk-sharing value-based payment agreement 
                or as limiting or superseding the ability of a State to 
                enter into a supplemental rebate agreement for a 
                covered outpatient drug.
                    ``(C) FFP for payments under risk-sharing value-
                based payment agreements.--Federal financial 
                participation shall be available under this title for 
                any payment made by a State to a manufacturer for a 
                covered outpatient drug under a risk-sharing value-
                based payment agreement in accordance with this 
                subsection, except that no Federal financial 
                participation shall be available for any payment made 
                by a State to a manufacturer under such an agreement on 
                and after the effective date of a disapproval of such 
                agreement by the Secretary.
                    ``(D) Continued application of other provisions.--
                Except as expressly provided in this subsection, 
                nothing in this subsection or in any regulations 
                promulgated under this subsection shall affect the 
                application of any other provision of this Act.
            ``(10) Appropriations.--For fiscal year 2020 and each 
        fiscal year thereafter, there are appropriated to the Secretary 
        $5,000,000 for the purpose of carrying out this subsection.
            ``(11) Definitions.--In this subsection:
                    ``(A) Chief actuary.--The term `Chief Actuary' 
                means the Chief Actuary of the Centers for Medicare & 
                Medicaid Services.
                    ``(B) Installment year.--The term `installment 
                year' means, with respect to a risk-sharing value-based 
                payment agreement, a 12-month period during which a 
                covered outpatient drug is administered under the 
                agreement.
                    ``(C) Potentially curative treatment intended for 
                one-time use.--The term `potentially curative treatment 
                intended for one-time use' means a treatment that 
                consists of the administration of a covered outpatient 
                drug that--
                            ``(i) is a form of gene therapy for a rare 
                        disease, as defined by the Commissioner of Food 
                        and Drugs, designated under section 526 of the 
                        Federal Food, Drug, and Cosmetic Act, and 
                        approved under section 505 of such Act or 
                        licensed under subsection (a) or (k) of section 
                        351 of the Public Health Service Act to treat a 
                        serious or life-threatening disease or 
                        condition;
                            ``(ii) if administered in accordance with 
                        the labeling of such drug, is expected to 
                        result in either--
                                    ``(I) the cure of such disease or 
                                condition; or
                                    ``(II) a reduction in the symptoms 
                                of such disease or condition to the 
                                extent that such disease or condition 
                                is not expected to lead to early 
                                mortality; and
                            ``(iii) is expected to achieve a result 
                        described in clause (ii), which may be achieved 
                        over an extended period of time, after not more 
                        than 3 administrations.
                    ``(D) Relevant clinical parameter.--The term 
                `relevant clinical parameter' means, with respect to a 
                covered outpatient drug that is the subject of a risk-
                sharing value-based payment agreement--
                            ``(i) a clinical endpoint specified in the 
                        drug's labeling or supported by one or more of 
                        the compendia described in section 
                        1861(t)(2)(B)(ii)(I) that--
                                    ``(I) is able to be measured or 
                                evaluated on an annual basis for each 
                                year of the agreement on an independent 
                                basis by a provider or other entity; 
                                and
                                    ``(II) is required to be achieved 
                                (based on observed metrics in patient 
                                populations) under the terms of the 
                                agreement; or
                            ``(ii) a surrogate endpoint (as defined in 
                        section 507(e)(9) of the Federal Food, Drug, 
                        and Cosmetic Act), including those developed by 
                        patient-focused drug development tools, that--
                                    ``(I) is able to be measured or 
                                evaluated on an annual basis for each 
                                year of the agreement on an independent 
                                basis by a provider or other entity; 
                                and
                                    ``(II) has been qualified by the 
                                Food and Drug Administration.
                    ``(E) Risk-sharing value-based payment agreement.--
                The term `risk-sharing value-based payment agreement' 
                means an agreement between a State plan and a 
                manufacturer--
                            ``(i) for the purchase of a covered 
                        outpatient drug of the manufacturer that is a 
                        potentially curative treatment intended for 
                        one-time use;
                            ``(ii) under which payment for such drug 
                        shall be made pursuant to an installment-based 
                        payment structure that meets the requirements 
                        of paragraph (3);
                            ``(iii) which conditions payment on the 
                        achievement of at least 2 relevant clinical 
                        parameters (as defined in subparagraph (C));
                            ``(iv) which provides that--
                                    ``(I) the State plan will directly 
                                reimburse the manufacturer for the 
                                drug; or
                                    ``(II) a third party will reimburse 
                                the manufacture in a manner approved by 
                                the Secretary; and
                            ``(v) is approved by the Secretary in 
                        accordance with paragraph (2).
                    ``(F) Total installment year amount.--The term 
                `total installment year amount' means, with respect to 
                a risk-sharing value-based payment agreement for the 
                purchase of a covered outpatient drug and an 
                installment year, an amount equal to the product of--
                            ``(i) the unit price of the drug charged 
                        under the agreement; and
                            ``(ii) the number of units of such drug 
                        administered under the agreement during such 
                        installment year.''.
    (b) Conforming Amendments.--
            (1) Section 1903(i)(10)(A) of the Social Security Act (42 
        U.S.C. 1396b(i)(10)(A)) is amended by striking ``or unless 
        section 1927(a)(3) applies'' and inserting ``, section 
        1927(a)(3) applies with respect to such drugs, or such drugs 
        are the subject of a risk-sharing value-based payment agreement 
        under section 1927(l)''.
            (2) Section 1927(b) of the Social Security Act (42 U.S.C. 
        1396r-8(b)) is amended--
                    (A) in paragraph (1)(A), by inserting ``but 
                excluding any drugs for which payment is made by a 
                State under a risk-sharing value-based payment 
                agreement under subsection (l))'' after ``for coverage 
                of such drugs''; and
                    (B) in paragraph (3)--
                            (i) in subparagraph (C)(i), by inserting 
                        ``or subsection (l)(2)(A)'' after 
                        ``subparagraph (A)''; and
                            (ii) in subparagraph (D), in the matter 
                        preceding clause (i), by inserting ``, under 
                        subsection (l)(2)(A),'' after ``under this 
                        paragraph''.
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