Prevention of Medicaid duplicate discounts; oversight of covered entities

Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 256b(a)(5)) is amended— (1) in subparagraph (A)— (A) in clause (ii), by striking The Secretary and inserting Subject to subsection (d)(2)(C), the Secretary; and (B) by adding at the end the following: (iii) Regulations Not later than 1 year after the date of enactment of this clause, the Secretary shall promulgate final regulations through notice-and-comment rulemaking describing— (I) methodologies State Medicaid programs and all covered entities under subsection (a)(4), and their contract pharmacies, shall use to identify and bill drugs purchased under the 340B program in a manner that ensures compliance with applicable prohibitions regarding duplicate discounts or rebates, including the duplicate discount prohibition under this subparagraph and the prohibitions under sections 1927(j)(1) and 1903(m)(2)(A)(xiii) of the Social Security Act, to include the application of such prohibitions to 340B drugs used by Medicaid managed care enrollees; and (II) procedures State Medicaid programs shall use to exclude requests for Medicaid rebates on covered outpatient drugs purchased under the 340B program that are dispensed, administered, or otherwise furnished to a Medicaid managed care enrollee and requirements for State Medicaid programs to promulgate rules to provide affected manufacturers a prompt remedy with respect to any incorrectly billed rebates for such drugs.; (2) in subparagraph (C)— (A) by striking A covered entity shall permit and inserting: (i) Duplicate discounts and drug resale A covered entity shall permit; (B) by striking (A) or (B) and inserting (A), (B), (J), or (K); and (C) by adding at the end the following: (ii) Use of margin A covered entity shall permit the Secretary to audit, at the Secretary’s expense, the records of the entity to determine— (I) how the margin (as defined in subparagraph (L)(iv)) generated on covered outpatient drugs subject to an agreement under this section dispensed or furnished by such entity (or a contract pharmacy described in subsection (a)(5)(F)) is used by such entity; and (II) such entity’s compliance with subparagraph (L). (iii) Records retention Covered entities shall retain such records and provide such records and reports as determined necessary by the Secretary for carrying out this subparagraph.; and (3) in subparagraph (D), by striking (A) or (B) and inserting (A), (B), (J), or (K).