[Congressional Record Volume 148, Number 66 (Tuesday, May 21, 2002)]
[Senate]
[Pages S4626-S4627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. STABENOW (for herself, Mr. Durbin, Mr. Leahy, Mr. 
        Jeffords, Mrs. Boxer, Mr. Levin, Mr. Dorgan, Mr. Schumer, and 
        Mr. Johnson):
  S. 2536. A bill to amend title XIX of the Social Security Act to 
clarify that section 1927 of that Act does not prohibit a State from 
entering into drug rebate agreements in order to make outpatient 
prescription drugs accessible and affordable for residents of the State 
who are not otherwise eligible for medical assistance under the 
medicaid program; to the Committee on Finance.
  Ms. STABENOW. I am pleased to rise today to introduce the Rx 
Flexibilty for States Act along with Senators Durbin, Leahy, Jeffords, 
Boxer, Levin, Dorgan, Schumer and Johnson.
  This legislation would give States the flexibility to set up programs 
to pass along Medicaid rebates and discounts to their citizens who do 
not have prescription drug coverage and who are not currently eligible 
for Medicaid.
  One of the biggest challenges facing businesses, senior citizens, 
families and State governments is the rising cost of prescription drug 
prices. From 2000-2001, prescription drug prices rose 17 percent. This 
is causing health expenditures and health insurance premiums to go up 
rapidly.
  In an attempt to respond to these skyrocketing prices, 30 States have 
enacted laws providing some type of prescription drug coverage to those 
without insurance, according to the National Governors' Association, 
NGA.
  However, the drug makers' trade association, PhRMA, has mounted legal 
challenges against several States because it opposes State efforts to 
lower prescription drug prices and increase coverage for those without 
it. Specifically, they have filed lawsuits against Maine and Vermont 
because the drug lobby does not want to extend Medicaid rebates and 
discounts to non-Medicaid recipients.
  While Maine's two programs have been upheld in Court, Vermont's has 
not and both States are embroiled in lengthy appeals processes. These 
legal challenges are very costly and may have deterred other States 
from establishing similar demonstration projects.
  In the absence of a Federal Medicare prescription drug benefit and 
soaring price of prescription drugs, States should have the unfettered 
ability to pass on Medicaid rebate to their residents! We need this 
legislation now, because even if Congress passes a Medicare 
prescription drug program, it will be several years before it is fully 
phased in.

[[Page S4627]]

  The Rx Flexibility for States Act would seek to remove the legal 
hurdles that are preventing States from providing lower priced 
prescription drugs to all their citizens.
  Specifically, States would be able to extend Medicaid rebates and 
discounts for prescription drugs to non-Medicaid eligible persons.
  State governments are closer to the people and deserve the 
flexibility to set up their own programs to lower the costs of 
prescription drugs for their citizens.
  This bill will give them that flexibility. I ask unanimous consent 
that the text of this bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2536

       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 ``Rx Flexibility for States 
     Act''.

     SEC. 2. CLARIFICATION OF STATE AUTHORITY RELATING TO MEDICAID 
                   DRUG REBATE AGREEMENTS.

       Section 1927 of the Social Security Act (42 U.S.C. 1396r-8) 
     is amended by adding at the end the following:
       ``(l) Rule of Construction.--Nothing in this section shall 
     be construed as prohibiting a State from--
       ``(1) directly entering into rebate agreements that are 
     similar to a rebate agreement described in subsection (b) 
     with a manufacturer for purposes of ensuring the 
     affordability of outpatient prescription drugs in order to 
     provide access to such drugs by residents of a State who are 
     not otherwise eligible for medical assistance under this 
     title; or
       ``(2) making prior authorization (that satisfies the 
     requirements of subsection (d) and that does not violate any 
     requirements of this title that are designed to ensure access 
     to medically necessary prescribed drugs for individuals 
     enrolled in the State program under this title) a condition 
     of not participating in such a similar rebate agreement.''.

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