[Congressional Record Volume 155, Number 41 (Monday, March 9, 2009)]
[Senate]
[Pages S2911-S2912]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Casey, Ms. Stabenow, and Mr. 
        Whitehouse):
  S. 547. A bill to amend title XIX of the Social Security Act to 
reduce the costs of prescription drugs for enrollees of Medicaid 
managed care organizations by extending the discounts offered under 
fee-for-service Medicaid to such organizations; to the Commmittee on 
Finance.
  Mr. BINGAMAN. Mr. President, I am introducing legislation today with 
Senators Casey, Stabenow, and Whitehouse entitled the Drug Rebate 
Equalization Act of 2009.
  The Medicaid drug rebate ensures that State Medicaid programs receive

[[Page S2912]]

the best price for prescription drugs for their beneficiaries. 
Unfortunately, health plans that serve over 10 million Medicaid 
beneficiaries cannot access the same discounts through the federal drug 
rebate program. Plans typically get no rebate on generic drugs and 
about a third of the rebate on branded drugs that states receive. 
States are paying more for the acquisition of prescription drugs for 
these health plan enrollees than for beneficiaries in fee-for-service 
Medicaid, thereby raising costs for Federal and State governments. In 
fact, the December 2008 Congressional Budget Office Health Options 
report found that equalizing the drug rebate between Medicaid fee-for-
service and managed care would save Federal taxpayers $11 billion over 
10 years.
  Even with this price disadvantage, the total cost of prescription 
drugs for health plans is less on a per member per month basis because 
of health plans' greater use of generics and case management. 
Unfortunately, many States are considering, or have already begun, 
carving out prescription drugs from health plans for the sole purpose 
of obtaining savings under the rebate--this undermines the plans' 
ability to maintain a comprehensive care and disease management program 
that includes prescription drugs. Not only will this legislation save 
money, it will eliminate this incentive and ensure that health plans 
can maintain a comprehensive care coordination system for their 
patients.
  This present drug rebate policy was passed by the Senate in 2005 as 
part of the Deficit Reduction Act. This year's version of the bill 
improves on last year's bill in several important ways. First, it 
requires States--not health plans--to collect the rebate. To protect 
plans against inappropriate cuts in payment, it requires states to 
publicly disclose information about savings obtained under the 
legislation. Second, the bill will reiterate that nothing in the 
legislation prevents a State from maintaining oversight control of its 
contracts with the health plans. Finally, the bill maintains the fee-
for-service prohibition against health plans ``double dipping'' into 
the Medicaid drug rebate and the 340b discount drug pricing program. 
These changes significantly improve the bill and will help improve its 
chances of passage.
  Extending the Medicaid drug rebate to enrollees in health plans is 
supported widely and includes the National Governors Association, the 
National Association of State Medicaid Directors, the National Medicaid 
Commission, the National Association of Community Health Centers, the 
Partnership for Medicaid, the Association for Community Affiliated 
Plans, and the Medicaid Health Plans of America. Last week, President 
Obama highlighted changes in Medicaid prescription drug rebates in his 
fiscal year 2010 budget to help pay for an expansion of health coverage 
for more Americans. I welcome President Obama's support and look 
forward to working with him to make this policy a reality.
  This legislation modernizes the Medicaid program, protects the 
ability of health plans to effectively coordinate prescription drugs as 
part of their care coordination systems, and will save Federal 
taxpayers $11 billion over 10 years.
  I urge my colleagues to join me in supporting this legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 547

       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 Rebate Equalization Act 
     of 2009''.

     SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES 
                   OF MEDICAID MANAGED CARE ORGANIZATIONS.

       (a) In General.--Section 1903(m)(2)(A) (42 U.S.C. 
     1396b(m)(2)(A)) is amended--
       (1) in clause (xi), by striking ``and'' at the end;
       (2) in clause (xii), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(xiii) such contract provides that (I) payment for 
     covered outpatient drugs dispensed to individuals eligible 
     for medical assistance who are enrolled with the entity shall 
     be subject to the same rebate required by the agreement 
     entered into under section 1927 as the State is subject to, 
     and (II) capitation rates paid to the entity shall be based 
     on actual cost experience related to rebates and subject to 
     the Federal regulations requiring actuarially sound rates.''.
       (b) Conforming Amendments.--Section 1927 (42 U.S.C. 1396r-
     8) is amended--
       (1) in subsection (d)--
       (A) in paragraph (1), by adding at the end the following:
       ``(C) Notwithstanding the subparagraphs (A) and (B)--
       ``(i) a Medicaid managed care organization with a contract 
     under section 1903(m) may exclude or otherwise restrict 
     coverage of a covered outpatient drug on the basis of 
     policies or practices of the organization, such as those 
     affecting utilization management, formulary adherence, and 
     cost sharing or dispute resolution, in lieu of any State 
     policies or practices relating to the exclusion or 
     restriction of coverage of such drugs, provided, however, 
     that any such exclusions and restrictions of coverage shall 
     be subject to any contractual requirements and oversight by 
     the State as contained in the Medicaid managed care 
     organization's contract with the State, and the State shall 
     maintain approval authority over the formulary used by the 
     Medicaid managed care organization; and
       ``(ii) nothing in this section or paragraph (2)(A)(xiii) of 
     section 1903(m) shall be construed as requiring a Medicaid 
     managed care organization with a contract under such section 
     to maintain the same such policies and practices as those 
     established by the State for purposes of individuals who 
     receive medical assistance for covered outpatient drugs on a 
     fee-for service basis.''; and
       (B) in paragraph (4), by inserting after subparagraph (E) 
     the following:
       ``(F) Notwithstanding the preceding subparagraphs of this 
     paragraph, any formulary established by Medicaid managed care 
     organization with a contract under section 1903(m) may be 
     based on positive inclusion of drugs selected by a formulary 
     committee consisting of physicians, pharmacists, and other 
     individuals with appropriate clinical experience as long as 
     drugs excluded from the formulary are available through prior 
     authorization, as described in paragraph (5).''; and
       (2) in subsection (j), by striking paragraph (1) and 
     inserting the following:
       ``(1) Covered outpatients drugs are not subject to the 
     requirements of this section if such drugs are--
       ``(A) dispensed by health maintenance organizations, 
     including Medicaid managed care organizations that contract 
     under section 1903(m); and
       ``(B) subject to discounts under section 340B of the Public 
     Health Service Act.''.
       (c) Reports.--Each State with a contract with a Medicaid 
     managed care organization under section 1903(m) of the Social 
     Security Act (42 U.S.C. 1396b(m)) shall report to the 
     Secretary on a quarterly basis the total amount of rebates in 
     dollars and volume received from manufacturers (as defined in 
     section 1927(k)(5) of such Act (42 U.S.C. 1396r-8(k)(5)) for 
     drugs provided to individuals enrolled with such an 
     organization as a result of the amendments made by this 
     section for both brand-name and generic drugs. The Secretary 
     shall review the reports submitted by States under this 
     subsection and, after such review, make publically available 
     the aggregate data contained in such reports.
       (d) Effective Date.--This section and the amendments made 
     by this section take effect on the date of enactment of this 
     Act and apply to rebate agreements entered into or renewed 
     under section 1927 of the Social Security Act (42 U.S.C. 
     1396r-8) on or after such date.
                                 ______