(a) General. As required under section 1860D-14B(b)(1)(C)(iii) of the Act, CMS will reduce the total rebate amount determined under § 428.201, if any is owed, for a generic Part D rebatable drug when CMS determines that the generic Part D rebatable drug is likely to be in shortage, as set forth in § 428.300.

(b) Calculation of the reduced rebate amount—(1) Initial reduction. If CMS determines the criteria set forth in paragraph (c)(4) of this section are met, then CMS will reduce the total rebate amount owed by the manufacturer for a generic Part D rebatable drug by 75 percent for the applicable period in which the request was submitted or the following applicable period, depending on the timing of the submission of the request.

(2) Extension of reduction. If CMS determines the generic Part D rebatable drug is likely to be in shortage in a second applicable period as set forth in paragraph (c)(5) of this section, then CMS will reduce the total rebate amount owed by the manufacturer for a generic Part D rebatable drug by 75 percent for a second consecutive applicable period.

(3) Application of reduction. If CMS determines that an NDC-11 is likely to be in shortage, CMS will apply any reduction of the rebate amount as determined under paragraphs (b)(1) and (2) of this section to the generic Part D rebatable drug at the NDC-9 level.

(4) Limitation on rebate reductions. If CMS grants a rebate reduction request under this section, and the generic Part D rebatable drug subject to the reduction is currently in shortage during the same applicable period as the one for which the request was granted, CMS will reduce the rebate amount as determined under paragraph (b)(1) of this section and will not grant a reduction determined under § 428.301 during that applicable period.

(c) Eligibility for a rebate reduction—(1) Eligible drug. Subject to paragraph (b)(3) of this section, eligibility for a rebate reduction under this section is limited to generic Part D rebatable drugs for which a manufacturer submits a rebate reduction request under this section.

(2) Timing. The manufacturer must submit the rebate reduction request before the start of the next applicable period in which the manufacturer believes the generic Part D rebatable drug is likely to be in shortage to receive consideration for a reduction in the rebate amount owed determined under paragraph (b)(1) of this section.

(3) Required elements of a rebate reduction request. To receive consideration for a reduction in the rebate amount owed determined under paragraph (b)(1) of this section, the manufacturer must submit to CMS information and supporting documentation to substantiate the evaluation criteria set forth in paragraph (c)(4) of this section. Such information and supporting documentation include the following:

(i) Evidence that demonstrates a generic Part D rebatable drug is likely to be in shortage, including anticipated cause(s) of the shortage and information about why the manufacturer believes the generic Part D rebatable drug is likely to be in shortage; and

(ii) Evidence of the anticipated start date and duration of the potential drug shortage, the actions the manufacturer is taking to avoid the potential drug shortage, and how the reduction of the rebate amount would reduce the likelihood of the drug appearing on an FDA shortage list.

(4) Evaluation criteria. In accordance with paragraph (b)(1) of this section, CMS will grant a reduction in the rebate amount owed if a manufacturer submits to CMS a request in writing for an eligible drug, in accordance with the timing set forth in paragraph (c)(2) of this section, demonstrating that:

(i) The generic Part D rebatable drug is likely to be in shortage;

(ii) The manufacturer is taking actions to avoid the potential drug shortage; and

(iii) The reduction of the rebate amount would reduce the likelihood of the drug appearing on an FDA shortage list.

(5) Rebate reduction extensions. If CMS determines that a generic Part D rebatable drug that received a reduction of the rebate amount as determined under paragraph (b)(1) of this section continues to be affected by the potential drug shortage, CMS will grant a single extension of the reduction for 1 additional consecutive applicable period and reduce the total rebate amount determined under § 428.201, if any is owed, as determined under paragraph (b)(2) of this section.

(i) To receive consideration for a rebate reduction extension, a manufacturer must submit a request with updated or new information and supporting documentation on why the generic Part D rebatable drug continues to be affected by the potential drug shortage during the second applicable period.

(ii) A manufacturer must submit the rebate reduction extension request at least 60 calendar days before the start of the second consecutive applicable period in which the manufacturer believes the generic Part D rebatable drug is likely to be in shortage to receive consideration for a reduction in the rebate amount owed, if any, in accordance with paragraph (b)(2) of this section.

(6) Decision to grant or deny a request. CMS will review rebate reduction requests and rebate reduction extension requests within 60 calendar days of receipt of all documentation, if feasible, beginning with the applicable period that begins on October 1, 2024.

(i) CMS will deny a rebate reduction request that does not meet the criteria set forth in paragraph (c)(4) of this section or that is incomplete or untimely based on the requirements set forth in this paragraph (c).

(ii) CMS will deny a rebate reduction extension request that does not meet the criteria set forth in paragraph (c)(5) of this section, that is incomplete or untimely based on the requirements set forth in paragraph (c)(5) of this section, or if a reduction determined under paragraph (b)(1) of this section was not granted for such generic Part D rebatable drug.

(iii) CMS' decisions to deny a request are final and will not be subject to an appeals process.

(7) Public disclosure of information. CMS will keep confidential, to the extent allowable under law, any requests for a rebate reduction, including supporting documentation. Information provided as part of a request for a rebate reduction that the submitter indicates is a trade secret or confidential commercial or financial information will be protected from disclosure if CMS determines the information meets the requirements set forth under Exemption 3 or Exemption 4 in 5 U.S.C. 552.