text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Affordable Medicines Utilization Act 
  of 2011''.
  
  SEC. 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)).
  
  SEC. 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.
target: Affordable Medicines Utilization Act of 2011 - Amends title XIX (Medicaid) of the Social Security Act (SSA), with respect to FY2012-FY2014, to require an increase in the quarterly Medicaid payment to a state by 50% of the generic drug utilization savings amount if the state's generic substitution rate for the most recent preceding fiscal year for which data is available is greater than its rate for the most recent second preceding fiscal year for which data is available.
  
  Directs the Secretary of Health and Human Services (HHS) to determine the state's generic substitution rate for such fiscal years.
  
  Defines "generic substitution rate" as the share of all drug units for which Medicaid payment is made to a state for the 20 most widely prescribed multiple source drugs under the state program that have a specific National Drug Code.
  
  Directs the Secretary to provide for payments to eligible states for implementation of programs to achieve reductions in expenditures under Medicaid or under SSA title XVIII (Medicare) (innovative health care savings program).
feat_title: To amend title XIX of the Social Security Act to encourage States to increase generic drug utilization under Medicaid.