(a) General. CMS may impose a civil money penalty on a manufacturer that fails to pay the rebate amount set forth in § 428.201(a) on a Part D rebatable drug set forth in § 428.20, by the payment deadline as set forth in section § 428.405(a) for such drug for such applicable period.
(b) Determination of the civil money penalty amount. CMS may impose a civil money penalty for each failure by a manufacturer to provide an applicable inflation rebate equal to 125 percent of the rebate amount determined in § 428.201(a).
(1) The civil money penalty is in addition to the rebate amount due.
(2) If a reconciled rebate amount as determined in § 428.401(d) or § 428.402(c)(1)(ii) or (c)(2)(ii) results in an increase to the rebate amount due, a separate civil money penalty may be imposed for the failure by a manufacturer to provide an inflation rebate for the applicable period for the increase to the rebate amount due.
(c) Notice of imposition of civil money penalties. If CMS makes a determination to impose a civil money penalty set forth in paragraph (b) of this section, CMS will send a written notice of its decision to impose a civil money penalty that includes the following:
(1) A description of the basis for the determination.
(2) The basis for the penalty.
(3) The amount of the penalty.
(4) The date the penalty is due.
(5) The manufacturer's right to a hearing as set forth in paragraph (e) of this section.
(6) Information about where to file the request for a hearing.
(d) Collection. (1) A manufacturer must pay the civil money penalty in full within 60 calendar days after the date of the notice of imposition of a civil money penalty from CMS as set forth in paragraph (c) of this section.
(2) In the event a manufacturer requests a hearing, pursuant to 42 CFR part 423, subpart T, the manufacturer must pay the amount in full within 60 calendar days after the date of a final decision by the Departmental Appeal Board, to uphold, in whole or in part, the civil money penalty.
(3) If the 60th calendar day described in paragraphs (d)(1) and (2) of this section is a weekend or a Federal holiday, then the timeframe is extended until the end of the next business day.
(e) Appeal procedures for civil money penalties. Section 1128A(c)(2) of the Act provides that CMS may not collect a civil money penalty until the affected party has had notice and the opportunity for a hearing.
(1) Manufacturers may appeal the following determinations:
(i) A CMS determination that the rebate amount was not paid by the applicable payment deadline as set forth in § 428.405.
(ii) The calculation of the amount of the civil money penalty.
(2) If CMS decides to impose a civil money penalty, CMS will provide the manufacturer with notice pursuant to the process set forth in paragraph (c) of this section.
(3) A manufacturer has a right to a hearing following a decision by CMS to impose a civil money penalty following the administrative appeal process and procedures established in 42 CFR part 423, subpart T.
(f) Other applicable provisions. The provisions of section 1128A of the Act (except subsections (a) and (b) of section 1128A of the Act) apply to civil money penalties under this section to the same extent that they apply to a civil money penalty or procedures under section 1128A of the Act.
(g) Bankruptcy. In the event that a manufacturer declares bankruptcy, as described in title 11 of the United States Code, and as a result of the bankruptcy, fails to pay either the full rebate amount owed or the total sum of civil money penalties imposed, the government reserves the right to file a proof of claim with the bankruptcy court to recover the unpaid amount of the rebates and civil money penalties owed by the manufacturer.