42 USC 1320f-3 - Negotiation and renegotiation process

U.S Code last checked for updates: Nov 22, 2024

§ 1320f–3.

Negotiation and renegotiation process

(a)

In general

For purposes of this part, under an agreement under section 1320f–2 of this title between the Secretary and a manufacturer of a selected drug (or selected drugs), with respect to the period for which such agreement is in effect and in accordance with subsections (b), (c), and (d), the Secretary and the manufacturer—

(1)

shall during the negotiation period with respect to such drug, in accordance with this section, negotiate a maximum fair price for such drug for the purpose described in section 1320f–2(a)(1) of this title; and

(2)

renegotiate, in accordance with the process specified pursuant to subsection (f), such maximum fair price for such drug for the purpose described in section 1320f–2(a)(2) of this title if such drug is a renegotiation-eligible drug under such subsection.

(b)

Negotiation process requirements

(1)

Methodology and process

(2)

Specific elements of negotiation process

As part of the negotiation process under this section, with respect to a selected drug and the negotiation period with respect to the initial price applicability year with respect to such drug, the following shall apply:

(A)

Submission of information

(B)

Initial offer by Secretary

(C)

Response to initial offer

(i)

In general

(ii)

Counteroffer requirements

If a manufacturer proposes a counteroffer, such counteroffer—

(I)

shall be in writing; and

(II)

shall be justified based on the factors described in subsection (e).

(D)

Response to counteroffer

(E)

Deadline

(F)

Limitations on offer amount

In negotiating the maximum fair price of a selected drug, with respect to the initial price applicability year for the selected drug, and, as applicable, in renegotiating the maximum fair price for such drug, with respect to a subsequent year during the price applicability period for such drug, the Secretary shall not offer (or agree to a counteroffer for) a maximum fair price for the selected drug that—

(i)

exceeds the ceiling determined under subsection (c) for the selected drug and year; or

(ii)

as applicable, is less than the floor determined under subsection (d) for the selected drug and year.

(c)

Ceiling for maximum fair price

(1)

General ceiling

(A)

In general

(B)

Subparagraph (B) amount

An amount equal to the following:

(i)

Covered part D drug

(ii)

Part B drug or biological

(C)

Subparagraph (C) amount

An amount equal to the applicable percent described in paragraph (3), with respect to such drug, of the following:

(i)

Initial price applicability year 2026

(ii)

Initial price applicability year 2027 and subsequent years

In the case of a selected drug with respect to which such initial price applicability year is 2027 or a subsequent year, the lower of—

(I)

the average non-Federal average manufacturer price for such drug for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the year of the selected drug publication date with respect to such initial price applicability year; or

(II)

the average non-Federal average manufacturer price for such drug for the year prior to the selected drug publication date with respect to such initial price applicability year.

(2)

Plan specific enrollment weighted amount

For purposes of paragraph (1)(B)(i), the plan specific enrollment weighted amount for a prescription drug plan or an MA–PD plan with respect to a covered Part D drug is an amount equal to the product of—

(A)

the negotiated price of the drug under such plan under part D of subchapter XVIII, net of all price concessions received by such plan or pharmacy benefit managers on behalf of such plan, for the most recent year for which data is available; and

(B)

a fraction—

(i)

the numerator of which is the total number of individuals enrolled in such plan in such year; and

(ii)

the denominator of which is the total number of individuals enrolled in a prescription drug plan or an MA–PD plan in such year.

(3)

Applicable percent described

For purposes of this subsection, the applicable percent described in this paragraph is the following:

(A)

Short-monopoly drugs and vaccines

(B)

Extended-monopoly drugs

(C)

Long-monopoly drugs

(4)

Extended-monopoly drug defined

(A)

In general

(B)

Exclusions

The term “extended-monopoly drug” shall not include any of the following:

(i)

A vaccine that is licensed under section 262 of this title and marketed pursuant to such section.

(ii)

A selected drug for which a manufacturer had an agreement under this part with the Secretary with respect to an initial price applicability year that is before 2030.

(C)

Clarification

(5)

Long-monopoly drug defined

(A)

In general

(B)

Exclusion

(6)

Average non-Federal average manufacturer price

(d)

Temporary floor for small biotech drugs

(e)

Factors

For purposes of negotiating the maximum fair price of a selected drug under this part with the manufacturer of the drug, the Secretary shall consider the following factors, as applicable to the drug, as the basis for determining the offers and counteroffers under subsection (b) for the drug:

(1)

Manufacturer-specific data

The following data, with respect to such selected drug, as submitted by the manufacturer:

(A)

Research and development costs of the manufacturer for the drug and the extent to which the manufacturer has recouped research and development costs.

(B)

Current unit costs of production and distribution of the drug.

(C)

Prior Federal financial support for novel therapeutic discovery and development with respect to the drug.

(D)

Data on pending and approved patent applications, exclusivities recognized by the Food and Drug Administration, and applications and approvals under section 355(c) of title 21 or section 262(a) of this title for the drug.

(E)

Market data and revenue and sales volume data for the drug in the United States.

(2)

Evidence about alternative treatments

The following evidence, as available, with respect to such selected drug and therapeutic alternatives to such drug:

(A)

The extent to which such drug represents a therapeutic advance as compared to existing therapeutic alternatives and the costs of such existing therapeutic alternatives.

(B)

Prescribing information approved by the Food and Drug Administration for such drug and therapeutic alternatives to such drug.

(C)

Comparative effectiveness of such drug and therapeutic alternatives to such drug, taking into consideration the effects of such drug and therapeutic alternatives to such drug on specific populations, such as individuals with disabilities, the elderly, the terminally ill, children, and other patient populations.

(D)

The extent to which such drug and therapeutic alternatives to such drug address unmet medical needs for a condition for which treatment or diagnosis is not addressed adequately by available therapy.

In using evidence described in subparagraph (C), the Secretary shall not use evidence from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.

(f)

Renegotiation process

(1)

In general

(2)

Renegotiation-eligible drug defined

In this section, the term “renegotiation-eligible drug” means a selected drug that is any of the following:

(A)

Addition of new indication

(B)

Change of status to an extended-monopoly drug

A selected drug that—

(i)

is not an extended-monopoly or a long-monopoly drug; and

(ii)

for which there is a change in status to that of an extended-monopoly drug.

(C)

Change of status to a long-monopoly drug

A selected drug that—

(i)

is not a long-monopoly drug; and

(ii)

for which there is a change in status to that of a long-monopoly drug.

(D)

Material changes

(3)

Selection of drugs for renegotiation

For each year (beginning with 2028), the Secretary shall select among renegotiation-eligible drugs for renegotiation as follows:

(A)

All extended-monopoly negotiation-eligible drugs

(B)

All long-monopoly negotiation-eligible drugs

(C)

Remaining drugs

(4)

Renegotiation process

(A)

In general

(B)

Consistent with negotiation process

(5)

Clarification

(g)

Clarification

(Aug. 14, 1935, ch. 531, title XI, § 1194, as added Pub. L. 117–169, title I, § 11001(a), Aug. 16, 2022, 136 Stat. 1843.)

cite as: 42 USC 1320f-3

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