SEC. 1741. PAYMENTS TO PHARMACISTS.

[a] Pharmacy Reimbursement Limits-

[1] IN GENERAL- Section- 1927[e] of the Social Security Act [42 U.S.C. 1396r-8[e]] is amended--

[A] by striking paragraph [5] and inserting the following:

'[5] USE OF AMP IN UPPER PAYMENT LIMITS- The Secretary shall calculate the Federal upper reimbursement limit established under paragraph [4] as 130 percent of the weighted average [determined on the basis of manufacturer utilization] of monthly average manufacturer prices.'.

[2] DEFINITION OF AMP- Section- 1927[k][1][B] of such Act [42 U.S.C. 1396r-8[k][1][B]] is amended--

[B] in the heading, by striking 'EXTENDED TO WHOLESALERS' and inserting 'AND OTHER PAYMENTS'; and

[C] by striking 'regard to' and all that follows through the period and inserting the following: 'regard to--

'[i] customary prompt pay discounts extended to wholesalers;

'[ii] bona fide service fees paid by manufacturers;

'[iii] reimbursement by manufacturers for recalled, damaged, expired, or otherwise unsalable returned goods, including reimbursement for the cost of the goods and any reimbursement of costs associated with return goods handling and processing, reverse logistics, and drug destruction;

'[iv] sales directly to, or rebates, discounts, or other price concessions provided to, pharmacy benefit managers, managed care organizations, health maintenance organizations, insurers, mail order pharmacies that are not open to all members of the public, or long term care providers, provided that these rebates, discounts, or price concessions are not passed through to retail pharmacies;

'[v] sales directly to, or rebates, discounts, or other price concessions provided to, hospitals, clinics, and physicians, unless the drug is an inhalation, infusion, or injectable drug, or unless the Secretary determines, as allowed for in Agency administrative procedures, that it is necessary to include such sales, rebates, discounts, and price concessions in order to obtain an accurate AMP for the drug. Such a determination shall not be subject to judicial review; or

'[vi] rebates, discounts, and other price concessions required to be provided under agreements under subsections [f] and [g] of section 1860D-2[f].'.

[3] MANUFACTURER REPORTING REQUIREMENTS- Section- 1927[b][3] of such Act [42 U.S.C. 1396r-8[b][3]] is amended--

[A] in subparagraph [A], by adding at the end the following new clause:

'[iv] not later than 30 days after the last day of each month of a rebate period under the agreement, on the manufacturer's total number of units that are used to calculate the monthly average manufacturer price for each covered outpatient drug.'.

[4] AUTHORITY TO PROMULGATE REGULATION- The Secretary of Health and Human Services may promulgate regulations to clarify the requirements for upper payment limits and for the determination of the average manufacturer price in an expedited manner. Such regulations may become effective on an interim final basis, pending opportunity for public comment.

[5] PHARMACY REIMBURSEMENTS THROUGH DECEMBER 31, 2010- The specific upper limit under section 447.332 of title 42, Code of Federal Regulations [as in effect on December 31, 2006] applicable to payments made by a State for multiple source drugs under a State Medicaid plan shall continue to apply through December 31, 2010, for purposes of the availability of Federal financial participation for such payments.

[b] Disclosure of Price Information to the Public- Section- 1927[b][3] of such Act [42 U.S.C. 1396r-8[b][3]] is amended--

[1] in subparagraph [A]--

[A] in clause [i], in the matter preceding subclause [I], by inserting 'month of a' after 'each'; and

[B] in the last sentence, by striking 'and shall,' and all that follows through the period; and

[2] in subparagraph [D][v], by inserting 'weighted' before 'average manufacturer prices'.