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 rebate amount for an applicable period is equal to the amount determined under § 428.201(a) for such new drug or, if greater, the alternative total rebate amount. CMS will determine the alternative total rebate amount for such new formulations according to the following:

(a) Identification of the initial drug. The initial drug that CMS will use to calculate the inflation rebate amount ratio is the initial drug identified in accordance with § 447.509(a)(4)(iii)(B) of this chapter for the last quarter of the applicable period or, if an initial drug was not identified in the last quarter, the initial drug identified for a quarter most recently in that applicable period.

(b) Calculation of the inflation rebate amount ratio. The inflation rebate amount ratio is equal to the per unit Part D drug inflation rebate amount for the initial drug, as determined under § 428.202(a), divided by the AnMP for that initial drug for the applicable period.

(c) Calculation of the alternative total rebate amount. The alternative total rebate amount is equal to the product of all of the following:

(1) The AnMP for the applicable period, as determined under § 428.202(b), of the Part D rebatable drug that is a line extension of a Part D rebatable drug that is an oral solid dosage form.

(2) The inflation rebate amount ratio as determined under paragraph (b) of this section.

(3) The total number of units dispensed under Part D identified as set forth in § 428.203.