S. 1637

119th CONGRESS 1st Session

To amend title XIX of the Social Security Act to codify value-based purchasing arrangements under the Medicaid program and reforms related to price reporting under such arrangements, and for other purposes.

IN THE SENATE OF THE UNITED STATES · May 7, 2025 · Sponsor: Mr. Mullin · Committee: Committee on Finance

S. 1637

SEC. 1. Short title

This Act may be cited as the or the .

(a) Codifying multiple best price points
- (1) In general
  - Section 1927(c)(1)(C)(ii) of the Social Security Act () is amended— 42 U.S.C. 1396r–8(c)(1)(C)(ii)
    - in subclause (III), by adding a semicolon at the end;
    - in subclause (IV), by striking and at the end;
    - in subclause (V), by striking the period and inserting ; and; and
      - may include multiple best price points for a single dosage form and strength of a drug of a manufacturer subject to a value-based purchasing arrangement (as defined in subsection (k)(12)), but only if such manufacturer offers such arrangement to all States.
    - by adding at the end the following new subclause:
- (2) Rule of construction
  - Nothing in the amendments made by this subsection may be construed to prohibit a manufacturer from treating a value-based purchasing arrangement as a bundled sale.
(b) Definition of average manufacturer price
- Section 1927(k)(1) of the Social Security Act () is amended— 42 U.S.C. 1396r–8(k)(1)
- Not later than 180 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall implement the amendments made by this subsection through rulemaking.
(c) Definition of value-Based purchasing arrangement
- Section 1927(k) of the Social Security Act () is amended by adding at the end the following paragraph: 42 U.S.C. 1396r–8(k)
  - (12) Value-Based Purchasing Arrangement
    - The term value-based purchasing arrangement has the meaning given such term in section 447.502 of title 42, Code of Federal Regulations (or any successor regulation).

SEC. 3. Calculation of average sales price under Medicare

Section 1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w–3a(c)(3)) is amended—
- by striking and inserting the following:
  - (A) In general
    - Subject to subparagraph (B), in calculating
  - (B) Certain remuneration under value-based purchasing arrangements excluded
    - In calculating the manufacturer’s average sales price under this subsection for a drug or biological that is sold under a value-based purchasing arrangement (as defined in section 1927(k)(12)) and with respect to which the manufacturer of such drug or biological has elected to include multiple best price points (as described in section 1927(c)(1)(C)(ii)(VI)) in reporting the best price of such drug under section 1927(b), such manufacturer's average sales price shall not include any amount that is excluded from the calculation of the average manufacturer price of such drug or biological under section 1927(k)(1)(B)(i)(IX).
- by adding at the end the following new subparagraph:

SEC. 4. Guidance on value-based purchasing arrangements for inpatient drugs under Medicaid

Not later than 180 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall issue guidance to State Medicaid agencies on the option of entering into a value-based purchasing arrangement (as defined in section 1927(k)(12) of the Social Security Act ()) with manufacturers for drugs or biological products provided as part of, or as incident to and in the same setting as, inpatient hospital services furnished under a State plan under title XIX of the Social Security Act (), or under a waiver of such plan, where such drugs or biological products are reimbursed directly and not paid for as part of payment for such inpatient hospital services, including guidance on how multiple States may enter into agreements with one another and with manufacturers which permit the transfer of funds between the participating States so that individuals who reside in a State different from the State in which they receive a drug subject to a value-based purchasing arrangement as an inpatient may be treated as if they received such drug in the State in which they reside. 42 U.S.C. 1396r–8(k)(12); 42 U.S.C. 1396 et seq.

SEC. 5. Exception under the antikickback statute

(a) In general
- Section 1128B(b)(3) of the Social Security Act (42 U.S.C. 1320a–7b(b)(3)) is amended—
  - in subparagraph (J), by moving the left margin of such subparagraph 2 ems to the left;
  - in subparagraph (K)—
    - by moving the left margin of such subparagraph 2 ems to the left; and
    - by striking and at the end;
  - in subparagraph (L)(iii), by striking the period and inserting ; and; and
    - any remuneration provided by a manufacturer or third party on behalf of a manufacturer to a State under a value-based purchasing arrangement (as defined in section 1927(k)(12)) under a State plan under title XIX (or waiver of such plan) in the case a patient fails to achieve outcomes or measures defined in such arrangement following the administration of a covered outpatient drug (as defined in section 1927(k)(2)).
  - by adding at the end the following new subparagraph:
(b) Rulemaking
- Not later than 180 days after the date of the enactment of this Act, the Inspector General of the Department of Health and Human Services shall through rulemaking implement the amendments made by this section.

SEC. 6. GAO study and report on use of value-based purchasing arrangements

(a) Study
- The Comptroller General of the United States shall conduct a study on the extent to which value-based purchasing arrangements (as defined in section 1927(k)(12) of the Social Security Act ()) facilitate patient access to covered outpatient drugs, improve patient outcomes, lower overall health system costs, and lower costs for patients in Federal health care programs. In conducting such study, the Comptroller General shall— 42 U.S.C. 1396r–8(k)(12)
  - study the impact of this Act on—
    - access to transformative therapies, including rare disease gene therapies, generally;
    - mitigating socioeconomic disparities in accessing covered outpatient drugs sold under value-based purchasing arrangements through its requirement that State Medicaid programs have access to the same value-based purchasing arrangement pricing structure that are available in the commercial market for such drugs;
    - the Medicaid drug rebate program under section 1927 of the Social Security Act (), the 340B drug pricing program under section 340B of the Public Health Service Act (), and part B of title XVIII of the Social Security Act (), including compliance with such programs; 42 U.S.C. 1396r–8; 42 U.S.C. 256b; 42 U.S.C. 1395j et seq.
    - expenditures under State Medicaid programs; and
    - prices for such drugs under the Medicaid program in States that do not enter into such arrangements;
  - analyze all the types of value-based purchasing arrangement pricing structures, which structures are working well (as measured by price and ease of implementing), and which need improvement; and
  - study the potential long-term savings for States that enter into such arrangements under State Medicaid programs.
(b) Report
- Not later than June 30, 2029, the Comptroller General of the United States shall submit to Congress a report containing the results of the study conducted under subsection (a).