PUBLIC LAW 101-508—NOV. 5, 1990 104 STAT. 1388-143 PART 1—REDUCTIONS IN SPENDING SEC. 4401. REIMBURSEMENT FOR PRESCRIBED DRUGS. (a) IN GENERAL. — (1) DENIAL OF FEDERAL FINANCIAL PARTICIPATION UNLESS REBATE AGREEMENTS AND DRUG USE REVIEW IN EFFECT.— Section 1903(i) (42 U.S.C. 1396b(i)) is amended— (A) by striking the period at the end of paragraph (9) and inserting "; or", and (B) by inserting after paragraph (9) the following new paragraph: "(10) with respect to covered outpatient drugs of a manufacturer dispensed in any State unless, (A) except as provided in section 1927(a)(3), the manufacturer complies with the rebate requirements of section 1927(a) with respect to the drugs so dispensed in all States, and (B) effective January 1, 1993, the State provides for drug use review in accordance with section 1927(g).". (2) PROHIBITING STATE PLAN DRUG ACCESS LIMITATIONS FOR DRUGS COVERED UNDER A REBATE AGREEMENT.—Section 1902(a) of such Act (42 U.S.C. 1396a(a)) is amended— (A) by striking "and" at the end of paragraph (52), (B) by striking the period at the end of paragraph (53) and inserting "; and ', and (C) by inserting after paragraph (53) the following new pargigraph: "(54XA) provide that, any formulary or similar restriction (except as provided in section 1927(d)) on the coverage of covered outpatient drugs under the plan shall permit the coverage of covered outpatient drugs of any manufacturer which has entered into and complies with an agreement under section 1927(a), which are prescribed for a medically accepted indication (as defined in subsection 1927(k)(6)), and "(B) comply with the reporting requirements of section 1927(b)(2)(A) and the requirements of subsections (d) and (g) of , • section 1927.". (3) REBATE AGREEMENTS FOR COVERED OUTPATIENT DRUGS, DRUG USE REVIEW, AND RELATED PROVISIONS. — Title XIX of the Social Security Act is amended by redesignating section 1927 as section 1928 and by inserting after section 1926 the following new 42 USC 1396s. section: "PAYMENT FOR COVERED OUTPATIENT DRUGS " SEC. 1927. (a) REQUIREMENT FOR REBATE AGREEMENT.— 42 USC i396r-8. "(1) IN GENERAL.— In order for payment to be available under section 1903(a) for covered outpatient drugs of a manufacturer, the manufacturer must have entered into and have in effect a rebate agreement described in subsection (b) with the Secretary, on behalf of States (except that, the Secretary may authorize a State to enter directly into agreements with a manufacturer). Any agreement between a State and a manufacturer prior to April 1, 1991, shall be deemed to have been entered into on January 1, 1991, and payment to such manufacturer shall be retroactively calculated as if the agreement between the manufacturer and the State had been entered into on January 1, 1991. If a manufacturer has not entered into such an agreement
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