Drug Price Transparency in Medicaid Act of 2021
This bill requires pass-through pricing models, and prohibits spread-pricing, for payment arrangements with pharmacy benefit managers under Medicaid. The bill also extends funding for retail pharmacy surveys and requires additional information with respect to price concessions, dispensing fees, and survey participation to be made publicly available.
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.

    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 Price Transparency in Medicaid 
Act of 2021''.

SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE USE OF ABUSIVE SPREAD 
              PRICING AND RELATED PRACTICES IN MEDICAID.

    (a) Pass-Through Pricing Required.--
            (1) In general.--Section 1927(e) of the Social Security Act 
        (42 U.S.C. 1396r-8(e)) is amended by adding at the end the 
        following:
            ``(6) Pass-through pricing required.--A contract between 
        the State and a pharmacy benefit manager (referred to in this 
        paragraph as a `PBM'), or a contract between the State and a 
        managed care entity or other specified entity (as such terms 
        are defined in section 1903(m)(9)(D)) that includes provisions 
        making the entity responsible for coverage of covered 
        outpatient drugs dispensed to individuals enrolled with the 
        entity, shall require that payment for such drugs and related 
        administrative services (as applicable), including payments 
        made by a PBM on behalf of the State or entity, is based on a 
        pass-through pricing model under which--
                    ``(A) any payment made by the entity or the PBM (as 
                applicable) for such a drug--
                            ``(i) is limited to--
                                    ``(I) ingredient cost; and
                                    ``(II) a professional dispensing 
                                fee that is not less than the 
                                professional dispensing fee that the 
                                State plan or waiver would pay if the 
                                plan or waiver was making the payment 
                                directly;
                            ``(ii) is passed through in its entirety by 
                        the entity or PBM to the pharmacy or provider 
                        that dispenses the drug; and
                            ``(iii) is made in a manner that is 
                        consistent with section 1902(a)(30)(A) and 
                        sections 447.512, 447.514, and 447.518 of title 
                        42, Code of Federal Regulations (or any 
                        successor regulation) as if such requirements 
                        applied directly to the entity or the PBM, 
                        except that any payment by the entity or the 
                        PBM (as applicable) for the ingredient cost of 
                        a covered outpatient drug dispensed by 
                        providers and pharmacies referenced in clauses 
                        (i) or (ii) of section 447.518(a)(1) of title 
                        42, Code of Federal Regulations (or any 
                        successor regulation) shall be the same as the 
                        payment amount for the ingredient cost when 
                        dispensed by providers and pharmacies not 
                        referenced in such clauses, and in no case 
                        shall payment for the ingredient cost of a 
                        covered outpatient drug be based on the actual 
                        acquisition cost of a drug dispensed by 
                        providers and pharmacies referenced in such 
                        clauses or take into account a drug's status as 
                        a drug purchased at a discounted price by a 
                        provider or pharmacy referenced in such 
                        clauses;
                    ``(B) payment to the entity or the PBM (as 
                applicable) for administrative services performed by 
                the entity or PBM is limited to a reasonable 
                administrative fee that covers the reasonable cost of 
                providing such services;
                    ``(C) the entity or the PBM (as applicable) shall 
                make available to the State, and the Secretary upon 
                request, all costs and payments related to covered 
                outpatient drugs and accompanying administrative 
                services incurred, received, or made by the entity or 
                the PBM, including ingredient costs, professional 
                dispensing fees, administrative fees, post-sale and 
                post-invoice fees, discounts, or related adjustments 
                such as direct and indirect remuneration fees, and any 
                and all other remuneration; and
                    ``(D) any form of spread pricing whereby any amount 
                charged or claimed by the entity or the PBM (as 
                applicable) is in excess of the amount paid to the 
                pharmacies on behalf of the entity, including any post-
                sale or post-invoice fees, discounts, or related 
                adjustments such as direct and indirect remuneration 
                fees or assessments (after allowing for a reasonable 
                administrative fee as described in subparagraph (B)) is 
                not allowable for purposes of claiming Federal matching 
                payments under this title.
            ``(7) Protection against mandates relating to use of 340b 
        drugs.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, no State, Medicaid managed care 
                organization (as defined in section 1903(m)(1)(A)), or 
                pharmacy benefit manager may prohibit a covered entity 
                under section 340B of the Public Health Service Act, or 
                a pharmacy under contract with a covered entity to 
                dispense drugs on behalf of the covered entity, from 
                dispensing covered outpatient drugs purchased under 
                such section to individuals receiving benefits under 
                this title and from receiving payment in accordance 
                with this section, or require that such covered entity 
                or pharmacy dispense covered outpatient drugs purchased 
                under section 340B to such individuals.
                    ``(B) Notification.--The Secretary shall notify 
                States that States may not prohibit a provider under 
                this title that is a covered entity under section 340B 
                of the Public Health Services Act, or a pharmacy under 
                contract with a covered entity, from submitting claims 
                for reimbursement for drugs purchased under such 
                section that are dispensed to individuals receiving 
                benefits under this title and may not require such 
                provider to dispense covered outpatient drugs purchased 
                under such section to such individuals.''.
            (2) Conforming amendment.--Section 1903(m)(2)(A)(xiii) of 
        such Act (42 U.S.C. 1396b(m)(2)(A)(xiii)) is amended--
                    (A) by striking ``and (III)'' and inserting 
                ``(III)'';
                    (B) by inserting before the period at the end the 
                following: ``, and (IV) pharmacy benefit management 
                services provided by the entity, or provided by a 
                pharmacy benefit manager on behalf of the entity under 
                a contract or other arrangement between the entity and 
                the pharmacy benefit manager, shall comply with the 
                requirements of section 1927(e)(6)''; and
                    (C) by moving the left margin 2 ems to the left.
            (3) Effective date.--The amendments made by this subsection 
        apply to contracts between States and managed care entities, 
        other specified entities, or pharmacy benefits managers that 
        are entered into or renewed on or after the date that is 18 
        months after the date of enactment of this Act.
    (b) Ensuring Accurate Payments to Pharmacies Under Medicaid.--
            (1) In general.--Section 1927(f) of the Social Security Act 
        (42 U.S.C. 1396r-8(f)) is amended--
                    (A) by striking ``and'' after the semicolon at the 
                end of paragraph (1)(A)(i) and all that precedes it 
                through ``(1)'' and inserting the following:
            ``(1) Determining pharmacy actual acquisition costs.--The 
        Secretary shall conduct a survey of retail community pharmacy 
        drug prices to determine the national average drug acquisition 
        cost as follows:
                    ``(A) Use of vendor.--The Secretary may contract 
                services for--
                            ``(i) with respect to retail community 
                        pharmacies, the determination of retail survey 
                        prices of the national average drug acquisition 
                        cost for covered outpatient drugs based on a 
                        monthly survey of such pharmacies, net of all 
                        discounts and rebates (to the extent any 
                        information with respect to such discounts and 
                        rebates is available); and'';
                    (B) by adding at the end of paragraph (1) the 
                following:
                    ``(F) Survey reporting.--In order to meet the 
                requirement of section 1902(a)(54), a State shall 
                require that any retail community pharmacy in the State 
                that receives any payment, reimbursement, 
                administrative fee, discount, or rebate related to the 
                dispensing of covered outpatient drugs to individuals 
                receiving benefits under this title, regardless of 
                whether such payment, fee, discount, or rebate is 
                received from the State or a managed care entity 
                directly or from a pharmacy benefit manager or another 
                entity that has a contract with the State or a managed 
                care entity, shall respond to surveys of retail prices 
                conducted under this subsection.
                    ``(G) Survey information.--Information on retail 
                community actual acquisition prices obtained under this 
                paragraph shall be made publicly available and shall 
                include at least the following:
                            ``(i) The monthly response rate of the 
                        survey including a list of pharmacies not in 
                        compliance with subparagraph (F).
                            ``(ii) The sampling frame and number of 
                        pharmacies sampled monthly.
                            ``(iii) Characteristics of reporting 
                        pharmacies, including type (such as independent 
                        or chain), geographic or regional location, and 
                        dispensing volume.
                            ``(iv) Reporting of a separate national 
                        average drug acquisition cost for each drug for 
                        independent retail pharmacies and chain 
                        pharmacies.
                            ``(v) Information on price concessions 
                        including on and off invoice discounts, 
                        rebates, and other price concessions to the 
                        extent that such information is available 
                        during the survey period.
                            ``(vi) Information on average professional 
                        dispensing fees paid.
                    ``(H) Report on specialty pharmacies.--
                            ``(i) In general.--Not later than 1 year 
                        after the effective date of this subparagraph, 
                        the Secretary shall submit a report to Congress 
                        examining specialty drug coverage and 
                        reimbursement under this title.
                            ``(ii) Content of report.--Such report 
                        shall include a description of how State 
                        Medicaid programs define specialty drugs, how 
                        much State Medicaid programs pay for specialty 
                        drugs, how States and managed care plans 
                        determine payment for specialty drugs, the 
                        settings in which specialty drugs are dispensed 
                        (such as retail community pharmacies or 
                        specialty pharmacies), whether acquisition 
                        costs for specialty drugs are captured in the 
                        national average drug acquisition cost survey, 
                        and recommendations as to whether specialty 
                        pharmacies should be included in the survey of 
                        retail prices to ensure national average drug 
                        acquisition costs capture drugs sold at 
                        specialty pharmacies and how such specialty 
                        pharmacies should be defined.'';
                    (C) in paragraph (2)--
                            (i) in subparagraph (A), by inserting ``, 
                        including payments rates under Medicaid managed 
                        care plans,'' after ``under this title''; and
                            (ii) in subparagraph (B), by inserting 
                        ``and the basis for such dispensing fees'' 
                        before the semicolon; and
                    (D) in paragraph (4), by inserting ``, and 
                $5,000,000 for fiscal year 2023 and each fiscal year 
                thereafter,'' after ``2010''.
            (2) Effective date.--The amendments made by this subsection 
        take effect on the first day of the first quarter that begins 
        on or after the date that is 18 months after the date of 
        enactment of this Act.
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Drug Price Transparency in Medicaid Act of 2021
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.
Drug Price Transparency in Medicaid Act of 2021
Rep. Carter, Earl L. "Buddy"