42 USC 1395 - Manufacturer discount program

View all text of Subpart 2 [§ 1395w-111 - § 1395w-116]

§ 1395w–114c. Manufacturer discount program

(a) Establishment

(b) Terms of agreement

(1) In general

(A) Agreement

(B) ClarificationNothing in this section shall be construed as affecting—

(i) the application of a coinsurance of 25 percent of the negotiated price, as applied under paragraph (2)(A) of section 1395w–102(b) of this title, for costs described in such paragraph; or

(ii) the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph.

(i) Special rule for 2025

(ii) 2026 and subsequent years

(2) Provision of appropriate data

(3) Compliance with requirements for administration of program

(4) Length of agreement

(A) In general

(B) Termination

(i) By the Secretary

(ii) By a manufacturerA manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—(I) if the termination occurs before January 31 of a plan year, as of the day after the end of the plan year; and(II) if the termination occurs on or after January 31 of a plan year, as of the day after the end of the succeeding plan year.

(iii) Effectiveness of termination

(5) Effective date of agreement

(1) Administration of programAdministering the program, including—

(A) the determination of the amount of the discounted price of an applicable drug of a manufacturer;

(B) the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—

(i) the negotiated price of the applicable drug; and

(ii) the discounted price of the applicable drug;

(C) the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as specified by the Secretary; and

(D) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, prescription drug plans and MA–PD plans, and the Secretary.

(2) Monitoring compliance

(3) Collection of data from prescription drug plans and MA–PD plans

(d) Administration

(1) In general

(2) Limitation

(e) Civil money penalty

(1) In generalA manufacturer that fails to provide discounted prices for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with an agreement in effect under this section shall be subject to a civil money penalty for each such failure in an amount the Secretary determines is equal to the sum of—

(A) the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and

(B) 25 percent of such amount.

(2) Application

(f) Clarification regarding availability of other covered part D drugs

(g) DefinitionsIn this section:

(1) Applicable beneficiaryThe term “applicable beneficiary” means an individual who, on the date of dispensing a covered part D drug—

(A) is enrolled in a prescription drug plan or an MA–PD plan;

(B) is not enrolled in a qualified retiree prescription drug plan; and

(C) has incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that exceed the annual deductible specified in section 1395w–102(b)(1) of this title.

(2) Applicable drugThe term “applicable drug”, with respect to an applicable beneficiary—

(A) means a covered part D drug—

(i) approved under a new drug application under section 355(c) of title 21 or, in the case of a biologic product, licensed under section 262 of this title; and

(ii)(I) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;(II) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or(III) is provided through an exception or appeal; and

(B) does not include a selected drug (as referred to under section 1320f–1(c) of this title) during a price applicability period (as defined in section 1320f(b)(2) of this title) with respect to such drug.

(3) Applicable number of calendar daysThe term “applicable number of calendar days” means—

(A) with respect to claims for reimbursement submitted electronically, 14 days; and

(B) with respect to claims for reimbursement submitted otherwise, 30 days.

(4) Discounted price

(A) In generalThe term “discounted price” means, subject to subparagraphs (B) and (C), with respect to an applicable drug of a manufacturer dispensed during a year to an applicable beneficiary—

(i) who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year, 90 percent of the negotiated price of such drug; and

(ii) who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the negotiated price of such drug.

(B) Phase-in for certain drugs dispensed to LIS beneficiaries

(i) In general

(ii) Specified manufacturer(I) In generalIn this subparagraph, subject to subclause (II), the term “specified manufacturer” means a manufacturer of an applicable drug for which, in 2021—(aa) the manufacturer had a coverage gap discount agreement under section 1395w–114a of this title;(bb) the total expenditures for all of the specified drugs of the manufacturer covered by such agreement or agreements for such year and covered under this part during such year represented less than 1.0 percent of the total expenditures under this part for all covered Part 1

1 So in original. Probably should not be capitalized.

D drugs during such year; and(cc) the total expenditures for all of the specified drugs of the manufacturer that are single source drugs and biological products for which payment may be made under part B during such year represented less than 1.0 percent of the total expenditures under part B for all drugs or biological products for which payment may be made under such part during such year.(II) Specified drugs(aa) In general(bb) Aggregation rule(III) Limitation

(iii) Specified LIS percentIn this subparagraph, the “specified LIS percent” means, with respect to a year—(I) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—(aa) for 2025, 99 percent;(bb) for 2026, 98 percent;(cc) for 2027, 95 percent;(dd) for 2028, 92 percent; and(ee) for 2029 and each subsequent year, 90 percent; and(II) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—(aa) for 2025, 99 percent;(bb) for 2026, 98 percent;(cc) for 2027, 95 percent;(dd) for 2028, 92 percent;(ee) for 2029, 90 percent;(ff) for 2030, 85 percent; and(gg) for 2031 and each subsequent year, 80 percent.

(i) In general

(ii) Specified small manufacturer(I) In generalIn this subparagraph, subject to subclause (III), the term “specified small manufacturer” means a manufacturer of an applicable drug for which, in 2021—(aa) the manufacturer is a specified manufacturer (as defined in subparagraph (B)(ii)); and(bb) the total expenditures under part D for any one of the specified small manufacturer drugs of the manufacturer that are covered by the agreement or agreements under section 1395w–114a of this title of such manufacturer for such year and covered under this part during such year are equal to or more than 80 percent of the total expenditures under this part for all specified small manufacturer drugs of the manufacturer that are covered by such agreement or agreements for such year and covered under this part during such year.(II) Specified small manufacturer drugs(aa) In general(bb) Aggregation rule(III) Limitation

(iii) Specified small manufacturer percentIn this subparagraph, the term “specified small manufacturer percent” means, with respect to a year—(I) for an applicable drug dispensed for an applicable beneficiary who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—(aa) for 2025, 99 percent;(bb) for 2026, 98 percent;(cc) for 2027, 95 percent;(dd) for 2028, 92 percent; and(ee) for 2029 and each subsequent year, 90 percent; and(II) for an applicable drug dispensed for an applicable beneficiary who has incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—(aa) for 2025, 99 percent;(bb) for 2026, 98 percent;(cc) for 2027, 95 percent;(dd) for 2028, 92 percent;(ee) for 2029, 90 percent;(ff) for 2030, 85 percent; and(gg) for 2031 and each subsequent year, 80 percent.

(D) Total expenditures

(E) Special case for certain claims

(i) Claims spanning deductible

(ii) Claims spanning out-of-pocket thresholdIn the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall entirely below or entirely above the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year, the manufacturer of the applicable drug shall provide the discounted price—(I) in accordance with subparagraph (A)(i) on the portion of the negotiated price of the applicable drug that falls below such threshold; and(II) in accordance with subparagraph (A)(ii) on the portion of such price of such drug that falls at or above such threshold.

(5) Manufacturer

(6) Negotiated price

(7) Qualified retiree prescription drug plan

(Aug. 14, 1935, ch. 531, title XVIII, § 1860D–14C, as added Pub. L. 117–169, title I, § 11201(c)(1), Aug. 16, 2022, 136 Stat. 1880.)