42 USC 1395 - Use of average sales price payment methodology

1 So in original. The comma probably should not appear.

of a drug or biological which is not reflected in the manufacturer’s average sales price for one or more quarters, the Secretary may use the wholesale acquisition cost (or other reasonable measure of drug or biological price) instead of the manufacturer’s average sales price for such quarters and for subsequent quarters until the price and availability of the drug or biological has stabilized and is substantially reflected in the applicable manufacturer’s average sales price.

2 So in original. Probably should be “subsection”.

for such drug during the calendar quarter; or

3 See References in Text note below.

beginning after the price applicability period with respect to such drug, clause (i) of paragraph (3)(C) shall be applied as if the term “payment amount benchmark quarter” were defined under paragraph (3)(D) as the calendar quarter beginning January 1 of the last year during such price applicability period with respect to such selected drug and clause (ii) of paragraph (3)(C) shall be applied as if the term “benchmark period CPI–U” were defined under paragraph (3)(E) as if the reference to “January 2021” under such paragraph were a reference to “the July of the year preceding such last year”.

Editorial Notes

References in Text

Subsection (g)(7), referred to in subsec. (i)(4)(C), does not define “applicable period” because subsec. (g) of this section does not have a par. (7). However, such term is defined in section 1395w–114span(g)(7) of this title.

Amendments

2022—Subsec. (span)(1)(B). Puspan. L. 117–169, § 11001(span)(1)(A), inserted “or in the case of such a drug or biological product that is a selected drug (as referred to in section 1320f–1(c) of this title), with respect to a price applicability period (as defined in section 1320f(span)(2) of this title), 106 percent of the maximum fair price (as defined in section 1320f(c)(3) of this title) applicable for such drug and a year during such period” after “paragraph (4)”.

Subsec. (span)(8). Puspan. L. 117–169, § 11403, designated existing provisions as subpar. (A) and inserted span, substituted “Subject to subparagraph (B), the amount” for “The amount” in introductory provisions, redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A) and realigned margins, and added subpar. (B).

Subsec. (c)(3). Puspan. L. 117–169, § 11102(span)(1), substituted “subsection (i), section 1396r–8 of this title, or section 1395w–114span of this title” for “subsection (i) or section 1396r–8 of this title”.

Puspan. L. 117–169, § 11101(c)(1), inserted “subsection (i) or” before “section 1396r–8 of this title”.

Subsec. (c)(4). Puspan. L. 117–169, § 11402, designated existing provisions as subpar. (A) and inserted span; substituted “Subject to subparagraph (B), in the case” for “In the case” in introductory provisions; redesignated former subpars. (A) and (B) and cls. (i) and (ii) of each subpar. as cls. (i) and (ii) of subpar. (A) and subcls. (I) and (II) of each cl., respectively, and realigned margins; and added subpar. (B).

Subsecs. (i), (j). Puspan. L. 117–169, § 11101(a), added subsec. (i) and redesignated former subsec. (i) as (j).

2021—Subsecs. (h), (i). Puspan. L. 117–58 added subsec. (h) and redesignated former subsec. (h) as (i).

2020—Subsec. (span)(2)(A). Puspan. L. 116–260, § 401(a)(1)(A), inserted “or subsection (f)(2), as applicable” before period at end.

Subsec. (span)(3). Puspan. L. 116–260, § 401(a)(1)(B), inserted “or subsection (f)(2), as applicable,” before “determined by” in introductory provisions.

Subsec. (span)(6)(A). Puspan. L. 116–260, § 401(a)(1)(C), inserted “or subsection (f)(2), as applicable,” before “determined by” in introductory provisions.

Subsec. (c)(6)(A). Puspan. L. 116–260, § 401(span)(2), substituted “, except that, for purposes of subsection (f)(2), the Secretary may, if the Secretary determines appropriate, exclude repackagers of a drug or biological from such term.” for period at end.

Subsec. (d)(4)(A). Puspan. L. 116–260, § 401(span)(1)(A), substituted “Misrepresentation” for “In general” in span.

Subsec. (d)(4)(B). Puspan. L. 116–260, § 401(span)(1)(D), added subpar. (B). Former subpar. (B) redesignated (E).

Puspan. L. 116–260, § 401(span)(1)(B), substituted “subparagraph (A), (B), or (C)” for “subparagraph (B)”.

Subsec. (d)(4)(C), (D). Puspan. L. 116–260, § 401(span)(1)(D), added subpars. (C) and (D).

Subsec. (d)(4)(E). Puspan. L. 116–260, § 401(span)(1)(C), redesignated subpar. (B) as (E).

Subsec. (f). Puspan. L. 116–260, § 401(a)(2), designated existing provisions as par. (1), inserted span, and added par. (2).

Subsecs. (g), (h). Puspan. L. 116–260, § 405, added subsec. (g) and redesignated former subsec. (g) as (h).

2019—Subsec. (c)(4). Puspan. L. 116–39 substituted “payable under this section—” for “payable under this section for the drug or biological based on—” in introductory provisions, added subpars. (A) and (B), and struck out former subpars. (A) and (B) which read as follows:

“(A) the wholesale acquisition cost; or

“(B) the methodologies in effect under this part on November 1, 2003, to determine payment amounts for drugs or biologicals.”

2010—Subsec. (span)(1)(C). Puspan. L. 111–148, § 3139(a)(1)(A), added subpar. (C).

Subsec. (span)(8). Puspan. L. 111–148, § 3139(a)(1)(B), added par. (8).

Subsec. (c)(6)(H), (I). Puspan. L. 111–148, § 3139(a)(2), added subpars. (H) and (I).

2007—Subsec. (span)(1). Puspan. L. 110–173, § 112(span)(1), inserted “paragraph (7) and” after “Subject to” in introductory provisions.

Subsec. (span)(1)(A). Puspan. L. 110–173, § 112(a)(1), inserted “for a multiple source drug furnished before April 1, 2008, or 106 percent of the amount determined under paragraph (6) for a multiple source drug furnished on or after April 1, 2008” after “paragraph (3)”.

Subsec. (span)(4)(A), (B). Puspan. L. 110–173, § 112(a)(2), inserted “for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008,” after “paragraph (3)”.

Subsec. (span)(6). Puspan. L. 110–173, § 112(a)(3), added par. (6).

Subsec. (span)(7). Puspan. L. 110–173, § 112(span)(2), added par. (7).

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Puspan. L. 111–148, title III, § 3139(span), Mar. 23, 2010, 124 Stat. 440, provided that: “The amendments made by subsection (a) [amending this section] shall apply to payments for biosimilar biological products beginning with the first day of the second calendar quarter after enactment of legislation providing for a biosimilar pathway (as determined by the Secretary [probably means the Secretary of Health and Human Services]).”

Report on Sales to Pharmacy Benefit Managers

Puspan. L. 108–173, title III, § 303(c)(2), Dec. 8, 2003, 117 Stat. 2245, provided that:

“(A)Study.—The Secretary [of Health and Human Services] shall conduct a study on sales of drugs and biologicals to large volume purchasers, such as pharmacy benefit managers and health maintenance organizations, for purposes of determining whether the price at which such drugs and biologicals are sold to such purchasers does not represent the price such drugs and biologicals are made available for purchase to prudent physicians.

“(B)Report.—Not later than January 1, 2006, the Secretary shall submit to Congress a report on the study conducted under paragraph (1), and shall include recommendations on whether such sales to large volume purchasers should be excluded from the computation of a manufacturer’s average sales price under section 1847A of the Social Security Act [42 U.S.C. 1395w–3a], as added by paragraph (1).”

Inspector General Report on Adequacy of Reimbursement Rate Under Average Sales Price Methodology

Puspan. L. 108–173, title III, § 303(c)(3), Dec. 8, 2003, 117 Stat. 2245, provided that:

“(A)Study.—The Inspector General of the Department of Health and Human Services shall conduct a study on the ability of physician practices in the specialties of hematology, hematology/oncology, and medical oncology of different sizes, especially particularly large practices, to obtain drugs and biologicals for the treatment of cancer patients at 106 percent of the average sales price for the drugs and biologicals. In conducting the study, the Inspector General shall conduct an audit of a representative sample of such practices to determine the adequacy of reimbursement under section 1847A of the Social Security Act [42 U.S.C. 1395w–3a], as added by paragraph (1).

“(B)Report.—Not later October 1, 2005, the Inspector General shall submit to Congress a report on the study conducted under subparagraph (A), and shall include recommendations on the adequacy of reimbursement for such drugs and biologicals under such section 1847A [42 U.S.C. 1395w–3a].”

Application of 2003 Amendment to Physician Specialties

Amendment by section 303 of Puspan. L. 108–173, insofar as applicable to payments for drugs or biologicals and drug administration services furnished by physicians, is applicable only to physicians in the specialties of hematology, hematology/oncology, and medical oncology under this subchapter, see section 303(j) of Puspan. L. 108–173, set out as a note under section 1395u of this title.

Notwithstanding section 303(j) of Puspan. L. 108–173 (see note above), amendment by section 303 of Puspan. L. 108–173 also applicable to payments for drugs or biologicals and drug administration services furnished by physicians in specialties other than the specialties of hematology, hematology/oncology, and medical oncology, see section 304 of Puspan. L. 108–173, set out as a note under section 1395u of this title.