What This Bill Does
This bill changes how Medicaid pays for prescription drugs to make pricing more transparent and stop unfair pricing practices. The bill requires states and pharmacy benefit managers (companies that manage prescription drug benefits for health plans) to use a specific payment method called "pass-through pricing" when they contract with each other or with managed care entities (health insurance plans).
Who It Affects
States running Medicaid programs, pharmacy benefit managers, managed care entities, retail community pharmacies, specialty pharmacies, and individuals receiving Medicaid benefits who need prescription drugs.
Key Provisions
- States and pharmacy benefit managers must use pass-through pricing models where the amount paid for drugs is limited to ingredient cost plus a professional dispensing fee, and this full amount must go directly to the pharmacy (Sec. 2(a)(1))
- Administrative fees paid to pharmacy benefit managers must be reasonable and cover only the actual cost of providing administrative services, and spread pricing (keeping the difference between what the plan pays and what the pharmacy receives) is not allowed (Sec. 2(a)(1))
- Pharmacy benefit managers and managed care entities must share all costs and payments information with the state and federal government, including ingredient costs, fees, discounts, and all other money they receive related to prescription drugs (Sec. 2(a)(1))
- The federal government must survey retail pharmacy drug prices monthly to determine national average drug acquisition costs and must make this pricing information publicly available (Sec. 2(b)(1))
- All retail community pharmacies receiving any payment related to Medicaid prescription drugs must respond to price surveys conducted by the government (Sec. 2(b)(1))
What Changes
When this law takes effect, states cannot pay pharmacy benefit managers using models that allow them to keep money as profit on the difference between what they pay pharmacies and what they charge the state. Instead, all money must flow directly to pharmacies. States must also publish national drug pricing information so the public can see what drugs actually cost. The government will conduct monthly surveys of pharmacy prices and require pharmacies to participate in these surveys.
Important Definitions
Spread pricing: A payment method where a pharmacy benefit manager or managed care entity charges the state more for a drug than it pays the pharmacy, keeping the difference as profit (Sec. 2(a)(1))
Pass-through pricing: A payment model where the full amount paid for a drug's ingredient cost and dispensing fee goes directly to the pharmacy, with no markup kept by the intermediary company (Sec. 2(a)(1))
Pharmacy benefit manager: A company that manages prescription drug benefits on behalf of a state or health plan (Sec. 2(a)(1))
Effective Date
The pass-through pricing requirements apply to contracts entered into or renewed 18 months after the bill becomes law (Sec. 2(a)(3)). The pharmacy payment accuracy improvements take effect on the first day of the first quarter that begins 18 months after the bill becomes law (Sec. 2(b)(2)).
I
118TH CONGRESS
1ST SESSION H. R. 1613
To amend title XIX of the Social Security Act to improve transparency
and prevent the use of abusive spread pricing and related practices
in the Medicaid program.
IN THE HOUSE OF REPRESENTATIVES
MARCH 17, 2023
Mr. CARTER of Georgia (for himself, Mr. VICENTE GONZALEZ of Texas, Ms.
STEFANIK, Ms. ROSS, Mr. ALLEN, and Mr. AUCHINCLOSS) 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 improve
transparency and prevent the use of abusive spread pric-
ing and related practices in the Medicaid program.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Drug Price Trans-
4
parency in Medicaid Act of 2023’’.
5
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SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE
1
USE OF ABUSIVE SPREAD PRICING AND RE-
2
LATED PRACTICES IN MEDICAID.
3
(a) PASS-THROUGH PRICING REQUIRED.—
4
(1) IN GENERAL.—Section 1927(e) of the So-
5
cial Security Act (42 U.S.C. 1396r–8(e)) is amended
6
by adding at the end the following:
7
‘‘(6) PASS-THROUGH
PRICING
REQUIRED.—A
8
contract between the State and a pharmacy benefit
9
manager (referred to in this paragraph as a ‘PBM’),
10
or a contract between the State and a managed care
11
entity or other specified entity (as such terms are
12
defined in section 1903(m)(9)(D)) that includes pro-
13
visions making the entity responsible for coverage of
14
covered outpatient drugs dispensed to individuals en-
15
rolled with the entity, shall require that payment for
16
such drugs and related administrative services (as
17
applicable), including payments made by a PBM on
18
behalf of the State or entity, is based on a pass-
19
through pricing model under which—
20
‘‘(A) any payment made by the entity or
21
the PBM (as applicable) for such a drug—
22
‘‘(i) is limited to—
23
‘‘(I) ingredient cost; and
24
‘‘(II) a professional dispensing
25
fee that is not less than the profes-
26
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•HR 1613 IH
sional dispensing fee that the State
1
plan or waiver would pay if the plan
2
or waiver was making the payment di-
3
rectly;
4
‘‘(ii) is passed through in its entirety
5
by the entity or PBM to the pharmacy or
6
provider that dispenses the drug; and
7
‘‘(iii) is made in a manner that is con-
8
sistent with section 1902(a)(30)(A) and
9
sections 447.512, 447.514, and 447.518 of
10
title 42, Code of Federal Regulations (or
11
any successor regulation) as if such re-
12
quirements applied directly to the entity or
13
the PBM, except that any payment by the
14
entity or the PBM (as applicable) for the
15
ingredient cost of a covered outpatient
16
drug dispensed by providers and phar-
17
macies referenced in clause (i) or (ii) of
18
section 447.518(a)(1) of title 42, Code of
19
Federal Regulations (or any successor reg-
20
ulation) shall be the same as the payment
21
amount for the ingredient cost when dis-
22
pensed by providers and pharmacies not
23
referenced in such clauses, and in no case
24
shall payment for the ingredient cost of a
25
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•HR 1613 IH
covered outpatient drug be based on the
1
actual acquisition cost of a drug dispensed
2
by providers and pharmacies referenced in
3
such clauses or take into account a drug’s
4
status as a drug purchased at a discounted
5
price by a provider or pharmacy referenced
6
in such clauses;
7
‘‘(B) payment to the entity or the PBM
8
(as applicable) for administrative services per-
9
formed by the entity or PBM is limited to a
10
reasonable administrative fee that covers the
11
reasonable cost of providing such services;
12
‘‘(C) the entity or the PBM (as applicable)
13
shall make available to the State, and the Sec-
14
retary upon request, all costs and payments re-
15
lated to covered outpatient drugs and accom-
16
panying administrative services incurred, re-
17
ceived, or made by the entity or the PBM, in-
18
cluding ingredient costs, professional dispensing
19
fees, administrative fees, post-sale and post-in-
20
voice fees, discounts, or related adjustments
21
such as direct and indirect remuneration fees,
22
and any and all other remuneration; and
23
‘‘(D) any form of spread pricing whereby
24
any amount charged or claimed by the entity or
25
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•HR 1613 IH
the PBM (as applicable) is in excess of the
1
amount paid to the pharmacies on behalf of the
2
entity, including any post-sale or post-invoice
3
fees, discounts, or related adjustments such as
4
direct and indirect remuneration fees or assess-
5
ments (after allowing for a reasonable adminis-
6
trative fee as described in subparagraph (B)) is
7
not allowable for purposes of claiming Federal
8
matching payments under this title.’’.
9
(2)
CONFORMING
AMENDMENT.—Section
10
1903(m)(2)(A)(xiii)
of
such
Act
(42
U.S.C.
11
1396b(m)(2)(A)(xiii)) is amended—
12
(A) by striking ‘‘and (III)’’ and inserting
13
‘‘(III)’’;
14
(B) by inserting before the period at the
15
end the following: ‘‘, and (IV) pharmacy benefit
16
management services provided by the entity, or
17
provided by a pharmacy benefit manager on be-
18
half of the entity under a contract or other ar-
19
rangement between the entity and the phar-
20
macy benefit manager, shall comply with the re-
21
quirements of section 1927(e)(6)’’; and
22
(C) by moving the left margin 2 ems to the
23
left.
24
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(3) EFFECTIVE DATE.—The amendments made
1
by this subsection apply to contracts between States
2
and managed care entities, other specified entities,
3
or pharmacy benefits managers that are entered into
4
or renewed on or after the date that is 18 months
5
after the date of enactment of this Act.
6
(b) ENSURING ACCURATE PAYMENTS
TO PHAR-
7
MACIES UNDER MEDICAID.—
8
(1) IN GENERAL.—Section 1927(f) of the Social
9
Security Act (42 U.S.C. 1396r–8(f)) is amended—
10
(A) by striking ‘‘and’’ after the semicolon
11
at the end of paragraph (1)(A)(i) and all that
12
precedes it through ‘‘(1)’’ and inserting the fol-
13
lowing:
14
‘‘(1) DETERMINING PHARMACY ACTUAL ACQUI-
15
SITION COSTS.—The Secretary shall conduct a sur-
16
vey of retail community pharmacy drug prices to de-
17
termine the national average drug acquisition cost as
18
follows:
19
‘‘(A) USE
OF
VENDOR.—The Secretary
20
may contract services for—
21
‘‘(i) with respect to retail community
22
pharmacies, the determination of retail
23
survey prices of the national average drug
24
acquisition cost for covered outpatient
25
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•HR 1613 IH
drugs based on a monthly survey of such
1
pharmacies; and’’;
2
(B) by adding at the end of paragraph (1)
3
the following:
4
‘‘(F) SURVEY
REPORTING.—In order to
5
meet the requirement of section 1902(a)(54), a
6
State shall require that any retail community
7
pharmacy in the State that receives any pay-
8
ment, reimbursement, administrative fee, dis-
9
count, or rebate related to the dispensing of
10
covered outpatient drugs to individuals receiv-
11
ing benefits under this title, regardless of
12
whether such payment, fee, discount, or rebate
13
is received from the State or a managed care
14
entity directly or from a pharmacy benefit man-
15
ager or another entity that has a contract with
16
the State or a managed care entity, shall re-
17
spond to surveys of retail prices conducted
18
under this subsection.
19
‘‘(G) SURVEY INFORMATION.—Information
20
on national drug acquisition prices obtained
21
under this paragraph shall be made publicly
22
available and shall include at least the fol-
23
lowing:
24
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•HR 1613 IH
‘‘(i) The monthly response rate of the
1
survey including a list of pharmacies not in
2
compliance with subparagraph (F).
3
‘‘(ii) The sampling frame and number
4
of pharmacies sampled monthly.
5
‘‘(iii) Information on price concessions
6
to the pharmacy, including discounts, re-
7
bates, and other price concessions, to the
8
extent that such information is available
9
during the survey period.
10
‘‘(H)
REPORT
ON
SPECIALTY
PHAR-
11
MACIES.—
12
‘‘(i) IN GENERAL.—Not later than 1
13
year after the effective date of this sub-
14
paragraph, the Secretary shall submit a re-
15
port to Congress examining specialty drug
16
coverage and reimbursement under this
17
title.
18
‘‘(ii) CONTENT OF REPORT.—Such re-
19
port shall include a description of how
20
State Medicaid programs define specialty
21
drugs and specialty pharmacies, how much
22
State Medicaid programs pay for specialty
23
drugs, how States and managed care plans
24
determine payment for specialty drugs, the
25
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•HR 1613 IH
settings in which specialty drugs are dis-
1
pensed (such as retail community phar-
2
macies or specialty pharmacies), to what
3
extent acquisition costs for specialty drugs
4
are captured in the national average drug
5
acquisition cost survey or through another
6
process, examples of specialty drug dis-
7
pensing fees to support the services associ-
8
ated with dispensing specialty drugs, and
9
recommendations as to whether specialty
10
pharmacies should be included in the sur-
11
vey of retail prices to ensure national aver-
12
age drug acquisition costs capture drugs
13
sold at specialty pharmacies and how such
14
specialty pharmacies should be defined.’’;
15
(C) in paragraph (2)—
16
(i) in subparagraph (A), by inserting
17
‘‘, including payments rates under Med-
18
icaid managed care plans,’’ after ‘‘under
19
this title’’; and
20
(ii) in subparagraph (B), by inserting
21
‘‘and the basis for such dispensing fees’’
22
before the semicolon; and
23
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•HR 1613 IH
(D) in paragraph (4), by inserting ‘‘, and
1
$5,000,000 for fiscal year 2025 and each fiscal
2
year thereafter,’’ after ‘‘2010’’.
3
(2) EFFECTIVE DATE.—The amendments made
4
by this subsection take effect on the first day of the
5
first quarter that begins on or after the date that is
6
18 months after the date of enactment of this Act.
7
Æ
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