text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``State Prescription Drug Discount Act 
  of 2002''.
  
  SEC. 2. FINDINGS.
  
      Congress makes the following findings:
              (1) More than 70,000,000 Americans, including more than 
          18,000,000 Medicare beneficiaries, are uninsured or 
          underinsured for prescription drug coverage.
              (2) High prescription drug prices are denying uninsured and 
          underinsured Americans access to medically necessary care, 
          thereby threatening their health and safety. Many of these 
          Americans require repeated doctor or medical clinic 
          appointments, becoming sicker because they cannot afford to 
          take the drugs prescribed for them. Many are admitted to or 
          treated at hospitals because they cannot afford the drugs 
          prescribed for them that could have prevented the need for 
          hospitalization. Many enter expensive institutional care 
          settings because they cannot afford the prescription drugs that 
          could have supported them outside of an institution. In each of 
          these circumstances, uninsured and underinsured residents too 
          often become medicaid recipients because of their inability to 
          afford prescription drugs.
              (3) Pursuant to the Social Security Act, State medicaid 
          programs receive discounts in the form of rebates for 
          outpatient prescription drugs. On average, these rebates 
          provide discounts of more than 40 percent off retail prices.
              (4) In 49 States, individual Americans do not have access 
          to medicaid rebates. But in 1 State, since June 1, 2001, over 
          100,000 Americans have received discounts from those rebates 
          through the ``Healthy Maine'' program. This program, 
          established as a demonstration project pursuant to a waiver 
          from the Secretary of Health and Human Services has proven to 
          work. Americans need that program replicated in every State, 
          immediately.
              (5) The Federal and State governments are the only agents 
          that, as a practical matter, can play an effective role as a 
          market participant on behalf of Americans who are uninsured or 
          underinsured.
  
  SEC. 3. STATE PRESCRIPTION DISCOUNT PROGRAM.
  
      (a) In General.--Section 1927(a) of the Social Security Act (42 
  U.S.C. 1396r-8(a)) is amended by adding at the end the following:
              ``(7) Requirements relating to agreements for drugs 
          procured by individuals through state prescription drug 
          discount programs.--
                      ``(A) In general.--A manufacturer meets the 
                  requirements of this paragraph if the manufacturer 
                  enters into an agreement with the State to make rebate 
                  payments for drugs covered by a State prescription drug 
                  discount program in the same amounts as are paid by the 
                  manufacturer to the State for such drugs under a rebate 
                  agreement described in subsection (b).
                      ``(B) State prescription drug discount program 
                  defined.--
                              ``(i) In general.--In this paragraph, the 
                          term `State prescription drug discount program' 
                          means a State program under which, with respect 
                          to a rebate period, not less than the amount 
                          equal to 95 percent of all the rebates paid to 
                          the State under agreements entered into under 
                          subparagraph (A) during such period is provided 
                          to eligible State residents in the form of 
                          discounted prices for the purchase of 
                          outpatient prescription drugs.
                              ``(ii) Eligible state resident.--For 
                          purposes of clause (i), the term `eligible 
                          State resident' means an individual who is a 
                          State resident and--
                                      ``(I) who is eligible for benefits 
                                  under title XVIII; or
                                      ``(II) whose income does not exceed 
                                  300 percent of the income official 
                                  poverty line (as defined by the Office 
                                  of Management and Budget, and revised 
                                  annually in accordance with section 
                                  673(2) of the Omnibus Budget 
                                  Reconciliation Act of 1981) applicable 
                                  to a family of the size involved.
                              ``(iii) Additional subsidies.--Nothing in 
                          this subparagraph shall be construed as--
                                      ``(I) requiring a State to expend 
                                  State funds to carry out a State 
                                  prescription drug discount program; or
                                      ``(II) prohibiting a State from 
                                  electing to contribute State funds to a 
                                  State prescription drug discount 
                                  program to provide greater subsidies to 
                                  eligible State residents for outpatient 
                                  prescription drugs covered under the 
                                  program.
                      ``(C) No offset against medical assistance.--
                  Amounts received by a State under an agreement entered 
                  into under subparagraph (A) in any quarter shall not be 
                  considered to be a reduction in the amount expended 
                  under the State plan in the quarter for medical 
                  assistance for purposes of section 1903(a)(1).''.
      (b) Conforming Amendment.--The first sentence of section 1927(a)(1) 
  of the Social Security Act (42 U.S.C. 1396r-8(a)(1)) is amended, by 
  striking ``and paragraph (6)'' and inserting ``, paragraph (6), and 
  paragraph (7)''.
  
  SEC. 4. ENHANCED REBATES FOR STATE MEDICAID PROGRAMS.
  
      Section 1927(b)(1)(B) of the Social Security Act (42 U.S.C. 1396r-
  8(b)(1)(B) is amended--
              (1) by striking ``Amounts'' and inserting the following:
                              ``(i) In general.--Except as provided in 
                          clause (ii) and subsection (a)(7)(C), 
                          amounts''; and
              (2) by adding at the end the following:
                              ``(ii) Enhanced rebate.--In the case of a 
                          State that has a State prescription drug 
                          discount program described in subsection (a)(7) 
                          and that has entered into a rebate agreement 
                          described in paragraph (1) or (4) of subsection 
                          (a) that provides a greater rebate for a 
                          covered outpatient drug than the rebate that 
                          would be paid for the covered outpatient drug 
                          under subsection (c), then, notwithstanding 
                          clause (i), only the amount equal to \1/2\ of 
                          the difference between the amount received by 
                          the State in any quarter under such a rebate 
                          agreement and the amount of the rebate that 
                          would be paid under subsection (c) for such 
                          covered outpatient drug shall be considered to 
                          be a reduction in the amount expended under the 
                          State plan in the quarter for medical 
                          assistance for purposes of section 
                          1903(a)(1).''.
  
  SEC. 5. EFFECTIVE DATE.
  
      The amendments made by this Act take effect on January 1, 2004.
target: State Prescription Drug Discount Act of 2002 - Amends title XIX (Medicaid) of the Social Security Act (SSA) to: (1) require drug manufacturers to pay rebates to State prescription drug discount programs as a condition of participation in a rebate agreement for outpatient prescription drugs under the Medicaid program; and (2) provide for enhanced rebates for State prescription drug discount programs of States with rebate agreements.
feat_title: A bill to amend title XIX of the Social Security Act to require drug manufacturers to pay rebates to State prescription drug discount programs as a condition of participation in a rebate agreement for outpatient prescription drugs under the medicaid program, to provide increased rebate payments to State medicaid programs, and for other purposes.