(a) General. As required under section 1860D-14B(b)(1)(C)(i) of the Act, CMS will reduce the total rebate amount determined under § 428.201(a), if any is owed, for a Part D rebatable drug that is currently in shortage, as set forth in § 428.300, at any point during the applicable period.
(b) Calculation of the reduced rebate amount. (1) For each applicable period beginning on or after October 1, 2022, the reduced total rebate amount for a Part D rebatable drug currently in shortage will be calculated using the following formula:
Equation 1 to Paragraph (b)(1)
Reduced Total Rebate Amount = the total rebate amount multiplied by (1 minus applicable percent reduction) multiplied by (percentage of time drug was currently in shortage during the applicable period) added to the total rebate amount multiplied by (1 minus percentage of time drug was currently in shortage during the applicable period)
(2) For purposes of paragraph (b)(1) of this section, the applicable percent reduction is:
(i) For a Part D rebatable drug that is a generic drug or plasma-derived product:
(A) 75 percent for the first applicable period such drug is currently in shortage.
(B) 50 percent for the second applicable period such drug is currently in shortage.
(C) 25 percent for each subsequent period such drug is currently in shortage.
(ii) For a Part D rebatable drug that is not a generic drug or plasma-derived product:
(A) 25 percent for the first applicable period such drug is currently in shortage.
(B) 10 percent for the second applicable period such drug is currently in shortage.
(C) 2 percent for each subsequent applicable period such drug is currently in shortage.
(iii) Except as provided in paragraph (b)(iv) of this section, CMS will apply the greatest applicable percent reduction as set forth in paragraph (b)(2)(i)(A) or (b)(2)(ii)(A) of this section starting with the first applicable period that a Part D drug or biological is described as currently in shortage, regardless of whether the drug or biological meets the definition of a Part D rebatable drug or whether a rebate amount is owed for that applicable period, starting with the applicable period that begins October 1, 2022.
(iv) If an applicable period for which a rebate reduction determined under § 428.302 or 428.303 has been granted would be the first applicable period set forth in paragraph (b)(2)(i)(A) or (b)(2)(ii)(A) of this section and the Part D rebatable drug or biosimilar continues to be in shortage after the rebate reduction period set forth in § 428.302 or 428.303, as applicable, CMS will treat the applicable period following the applicable period in which the rebate reduction determined under § 428.302 or 428.303 applies as the first applicable period so described.
(3) For purposes of paragraph (b)(1) of this section, the percentage of time the drug is currently in shortage during the applicable period is equal to the number of days such drug is currently in shortage in an applicable period, divided by the total number of days in the applicable period.
(c) Application of reduction. CMS will apply a reduction of the rebate amount as determined under paragraph (b) of this section to the Part D rebatable drug at the NDC-9 level.