article: 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.
summary: 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.