1. Short title This Act may be cited as the Drug Price Transparency in Medicaid Act of 2023 . 2. Improving transparency and preventing the use of abusive spread pricing and related practices in Medicaid (a) Pass-Through pricing required (1) In general Section 1927(e) of the Social Security Act ( 42 U.S.C. 1396r–8(e) ) is amended by adding at the end the following: (6) Pass-through pricing required A contract between the State and a pharmacy benefit manager (referred to in this paragraph as a PBM ), or a contract between the State and a managed care entity or other specified entity (as such terms are defined in section 1903(m)(9)(D)) that includes provisions making the entity responsible for coverage of covered outpatient drugs dispensed to individuals enrolled with the entity, shall require that payment for such drugs and related administrative services (as applicable), including payments made by a PBM on behalf of the State or entity, is based on a pass-through pricing model under which— (A) any payment made by the entity or the PBM (as applicable) for such a drug— (i) is limited to— (I) ingredient cost; and (II) a professional dispensing fee that is not less than the professional dispensing fee that the State plan or waiver would pay if the plan or waiver was making the payment directly; (ii) is passed through in its entirety by the entity or PBM to the pharmacy or provider that dispenses the drug