Sec. 202. Medicare part D rebate by manufacturers

2,262 words·~10 min read·/bill/116/hr/3/eh/section-202

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Part D of title XVIII of the Social Security Act is amended by inserting after section 1860D–14A ( 42 U.S.C. 1395w–114a ) the following new section: Subject to the provisions of this section, in order for coverage to be available under this part for a part D rebatable drug (as defined in subsection (h)(1)) of a manufacturer (as defined in section 1927(k)(5)) dispensed during an applicable year, the manufacturer must have entered into and have in effect an agreement described in subsection (b). Paragraph

(1)shall not apply to the dispensing of a covered part D drug if— the Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part; or the Secretary determines that in the period beginning on January 1, 2022, and ending on December 31, 2022, there were extenuating circumstances. For purposes of this section the term applicable year means a year beginning with 2022. An agreement described in this subsection, with respect to a manufacturer of a part D rebatable drug, is an agreement under which the following shall apply: Not later than 9 months after the end of each applicable year with respect to which the agreement is in effect, the Secretary, for each part D rebatable drug of the manufacturer, shall report to the manufacturer the following for such year: Information on the total number of units (as defined in subsection (h)(2)) for each dosage form and strength with respect to such part D rebatable drug and year. Information on the amount (if any) of the excess average manufacturer price increase described in subsection (c)(1)(B) for each dosage form and strength with respect to such drug and year. The rebate amount specified under subsection

(c)for each dosage form and strength with respect to such drug and year. For each applicable year with respect to which the agreement is in effect, the manufacturer of the part D rebatable drug, for each dosage form and strength with respect to such drug, not later than 30 days after the date of receipt from the Secretary of the information described in subparagraph

(A)for such year, shall provide to the Secretary a rebate that is equal to the amount specified in subsection

(c)for such dosage form and strength with respect to such drug for such year. An agreement under this section, with respect to a part D rebatable drug, shall be effective for an initial period of not less than one year and shall be automatically renewed for a period of not less than one year unless terminated under subparagraph (B). The Secretary may provide for termination of an agreement under this section for violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, but such hearing shall not delay the effective date of the termination. A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year— if the termination occurs before January 30 of the plan year, as of the day after the end of the plan year; and if the termination occurs on or after January 30 of the plan year, as of the day after the end of the succeeding plan year. Any termination under this paragraph shall not affect rebates due under the agreement under this section before the effective date of its termination. In the case of any agreement under this section with a manufacturer that is terminated in a plan year, the Secretary may not enter into another such agreement with the manufacturer (or a successor manufacturer) before the subsequent plan year, unless the Secretary finds good cause for an earlier reinstatement of such an agreement. For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable year is, subject to subparagraphs

(B)and

(C)of paragraph (5), the amount equal to the product of— the total number of units of such dosage form and strength with respect to such part D rebatable drug and year; and the amount (if any) by which— the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the year; exceeds the inflation-adjusted payment amount determined under paragraph

(3)for such dosage form and strength with respect to such part D rebatable drug for the year. The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable year, is the sum of the products of— the average manufacturer price (as defined in subsection (h)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such year; and the ratio of— the total number of units of such dosage form and strength dispensed during each such calendar quarter of such year; to the total number of units of such dosage form and strength dispensed during such year. The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable year, subject to subparagraphs

(A)and

(D)of paragraph (5), is— the benchmark year manufacturer price determined under paragraph

(4)for such dosage form and strength with respect to such drug and an applicable year; increased by the percentage by which the applicable year CPI–U (as defined in subsection (h)(5)) for the applicable year exceeds the benchmark period CPI–U (as defined in subsection (h)(4)). The benchmark year manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable year, is the sum of the products of— the average manufacturer price (as defined in subsection (h)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of the payment amount benchmark year (as defined in subsection (h)(3)); and the ratio of— the total number of units of such dosage form and strength dispensed during each such calendar quarter of such payment amount benchmark year; to the total number of units of such dosage form and strength dispensed during such payment amount benchmark year. In the case of a part D rebatable drug first approved or licensed by the Food and Drug Administration after January 1, 2016, subparagraphs

(A)and

(B)of paragraph

(4)shall be applied as if the term payment amount benchmark year were defined under subsection (h)(3) as the first calendar year beginning after the day on which the drug was first marketed by any manufacturer and subparagraph

(B)of paragraph

(3)shall be applied as if the term benchmark period CPI–U were defined under subsection (h)(4) as if the reference to January 2016 under such subsection were a reference to January of the first year beginning after the date on which the drug was first marketed by any manufacturer . The Secretary may reduce or waive the rebate under paragraph

(1)with respect to a part D rebatable drug that is described as currently in shortage on the shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act or in the case of other exigent circumstances, as determined by the Secretary. In the case of a part D rebatable drug that is a line extension of a part D rebatable drug that is an oral solid dosage form, the Secretary shall establish a formula for determining the amount specified in this subsection with respect to such part D rebatable drug and an applicable year with consideration of the original part D rebatable drug. In this subparagraph, the term line extension means, with respect to a part D rebatable drug, a new formulation of the drug (as determined by the Secretary), such as an extended release formulation, but does not include an abuse-deterrent formulation of the drug (as determined by the Secretary), regardless of whether such abuse-deterrent formulation is an extended release formulation. In the case of a part D rebatable drug that is a selected drug (as defined in section 1192(c)) for a price applicability period (as defined in section 1191(b)(2))— for plan years during such period for which a maximum fair price (as defined in section 1191(c)(2)) for such drug has been determined and is applied under part E of title XI, the rebate under subsection (b)(1)(B) shall be waived; and in the case such drug is determined (pursuant to such section 1192(c)) to no longer be a selected drug, for each applicable year beginning after the price applicability period with respect to such drug, subparagraphs

(A)and

(B)of paragraph

(4)shall be applied as if the term payment amount benchmark year were defined under subsection (h)(3) as the last year beginning during such price applicability period with respect to such selected drug and subparagraph

(B)of paragraph

(3)shall be applied as if the term benchmark period CPI–U were defined under subsection (h)(4) as if the reference to January 2016 under such subsection were a reference to January of the last year beginning during such price applicability period with respect to such drug. Amounts paid as rebates under subsection

(c)shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under section 1841. For purposes of carrying out this section, the Secretary shall use information submitted by manufacturers under section 1927(b)(3). In the case of a manufacturer of a part D rebatable drug with an agreement in effect under this section who has failed to comply with the terms of the agreement under subsection (b)(1)(B) with respect to such drug for an applicable year, the Secretary may impose a civil money penalty on such manufacturer in an amount equal to 125 percent of the amount specified in subsection

(c)for such drug for such year. The provisions of section 1128A (other than subsections

(a)(with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). There shall be no judicial review of the following: The determination of units under this section. The determination of whether a drug is a part D rebatable drug under this section. The calculation of the rebate amount under this section. In this section: The term part D rebatable drug means a drug or biological that would (without application of this section) be a covered part D drug, except such term shall, with respect to an applicable year, not include such a drug or biological if the average annual total cost under this part for such year per individual who uses such a drug or biological, as determined by the Secretary, is less than, subject to subparagraph (B), $100, as determined by the Secretary using the most recent data available or, if data is not available, as estimated by the Secretary. The dollar amount applied under subparagraph (A)— for 2023, shall be the dollar amount specified under such subparagraph for 2022, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with January of 2022; and for a subsequent year, shall be the dollar amount specified in this subparagraph for the previous year, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with January of the previous year. Any dollar amount specified under this subparagraph that is not a multiple of $10 shall be rounded to the nearest multiple of $10. The term unit means, with respect to a part D rebatable drug, the lowest identifiable quantity (such as a capsule or tablet, milligram of molecules, or grams) of the part D rebatable drug that is dispensed to individuals under this part. The term payment amount benchmark year means the year beginning January 1, 2016. The term benchmark period CPI–U means the consumer price index for all urban consumers (United States city average) for January 2016. The term applicable year CPI–U means, with respect to an applicable year, the consumer price index for all urban consumers (United States city average) for January of such year. The term average manufacturer price has the meaning, with respect to a part D rebatable drug of a manufacturer, given such term in section 1927(k)(1), with respect to a covered outpatient drug of a manufacturer for a rebate period under section 1927. . Section 1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w–3a(c)(3)), as amended by section 201(c)(1), is further amended by striking section 1927 or section 1834(x) and inserting section 1927, section 1834(x), or section 1860D–14B . Section 1927(c)(1)(C)(ii)(I) of the Social Security Act ( 42 U.S.C. 1396r–8(c)(1)(C)(ii)(I) ), as amended by section 201(c)(2), is further amended by striking or section 1834(x) and inserting , section 1834(x), or section 1860D–14B . Section 1927(b)(3)(D)(i) of the Social Security Act ( 42 U.S.C. 1396r–8(b)(3)(D)(i) ), as amended by section 201(c)(3), is further amended by striking or section 1834(x) and inserting , section 1834(x), or section 1860D–14B .

Connections4 off-index

4 references not yet in our index

42 USC 1395w–114a
42 USC 1395w–3a(c)(3)
42 USC 1396r–8(c)(1)(C)(ii)(I)
42 USC 1396r–8(b)(3)(D)(i)

Citation graph

cites case law

Sec. 202

Medicare part D rebate by manufacturers

Cite42 USC 1395w–114a

Cite42 USC 1395w–3a(c)(3)

Cite42 USC 1396r–8(c)(1)(C)(ii)(I)

Cite42 USC 1396r–8(b)(3)(D)(i)

Cites 4Cited by 0 across 0 sources