(a) General. As required under section 1847A(i)(3)(G)(i) of the Act, CMS will reduce the total rebate amount determined under § 427.301(a), if any is owed, for a Part B rebatable drug that is currently in shortage, as set forth in § 427.400, at any point during the applicable calendar quarter.
(b) Calculation of the reduced rebate amount. (1) For each applicable calendar quarter beginning on or after January 1, 2023, the reduced total rebate amount for a Part B 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 calendar quarter) added to the total rebate amount multiplied by (1 minus percentage of time drug was currently in shortage during the applicable calendar quarter)
(2) For purposes of paragraph (b)(1) of this section, the applicable percent reduction is:
(i) For a Part B rebatable drug that is a plasma-derived product:
(A) 75 percent for the first 4 consecutive applicable calendar quarters such drug is currently in shortage.
(B) 50 percent for the second 4 consecutive applicable calendar quarters such drug is currently in shortage.
(C) 25 percent for each subsequent applicable calendar quarter such drug is currently in shortage.
(ii) For a Part B rebatable drug that is not a plasma-derived product:
(A) 25 percent for the first 4 consecutive applicable calendar quarters such drug is currently in shortage.
(B) 10 percent for the second 4 consecutive applicable calendar quarters such drug is currently in shortage.
(C) 2 percent for each subsequent applicable calendar quarter 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 calendar quarter that a Part B drug or biological product is described as currently in shortage regardless of whether the drug or biological product meets the definition of a Part B rebatable drug or whether a rebate amount is owed for that calendar quarter, starting with the calendar quarter that begins January 1, 2023.
(iv) If any applicable calendar quarter for which a rebate reduction determined under § 427.402 has been granted would be the first of the four consecutive applicable calendar quarters set forth in paragraph (b)(2)(i)(A) or (b)(2)(ii)(A) of this section and the Part B rebatable drug or biological product continues to be currently in shortage after the rebate reduction period set forth in § 427.402, CMS will treat the quarter following the final quarter in which the rebate reduction determined under § 427.402 applies as the first of the four consecutive applicable calendar quarters 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 calendar quarter is equal to the number of days such drug is currently in shortage in an applicable calendar quarter, divided by the total number of days in the applicable calendar quarter.
(c) Application of reduction. CMS will apply a reduction of the rebate amount as determined under paragraph (b) of this section to all the NDCs under the relevant billing and payment code.