42 USC 1395w-3b - Competitive acquisition of outpatient drugs and biologicals

U.S Code last checked for updates: Nov 26, 2024

§ 1395w–3b.

Competitive acquisition of outpatient drugs and biologicals

(a)

Implementation of competitive acquisition

(1)

Implementation of program

(A)

In general

The Secretary shall establish and implement a competitive acquisition program under which—

(i)

competitive acquisition areas are established for contract award purposes for acquisition of and payment for categories of competitively biddable drugs and biologicals (as defined in paragraph (2)) under this part;

(ii)

each physician is given the opportunity annually to elect to obtain drugs and biologicals under the program, rather than under section 1395w–3a of this title; and

(iii)

each physician who elects to obtain drugs and biologicals under the program makes an annual selection under paragraph (5) of the contractor through which drugs and biologicals within a category of drugs and biologicals will be acquired and delivered to the physician under this part.

This section shall not apply in the case of a physician who elects section 1395w–3a of this title to apply.

(B)

Implementation

(C)

Waiver of certain provisions

(D)

Exclusion authority

The Secretary may exclude competitively biddable drugs and biologicals (including a class of such drugs and biologicals) from the competitive bidding system under this section if the application of competitive bidding to such drugs or biologicals—

(i)

is not likely to result in significant savings; or

(ii)

is likely to have an adverse impact on access to such drugs or biologicals.

(2)

Competitively biddable drugs and biologicals and program defined

For purposes of this section—

(A)

Competitively biddable drugs and biologicals defined

(B)

Program

(C)

Competitive acquisition area; area

(D)

Contractor

(3)

Application of program payment methodology

(A)

In general

With respect to competitively biddable drugs and biologicals which are supplied under the program in an area and which are prescribed by a physician who has elected this section to apply—

(i)

the claim for such drugs and biologicals shall be submitted by the contractor that supplied the drugs and biologicals;

(ii)

collection of amounts of any deductible and coinsurance applicable with respect to such drugs and biologicals shall be the responsibility of such contractor and shall not be collected unless the drug or biological is administered to the individual involved; and

(iii)

the payment under this section (and related amounts of any applicable deductible and coinsurance) for such drugs and biologicals shall be made only to such contractor upon receipt of a claim for a drug or biological supplied by the contractor for administration to a beneficiary.

(B)

Process for adjustments

(C)

Information for purposes of cost-sharing

(D)

Post-payment review process

(4)

Contract required

Payment may not be made under this part for competitively biddable drugs and biologicals prescribed by a physician who has elected this section to apply within a category and a competitive acquisition area with respect to which the program applies unless—

(A)

the drugs or biologicals are supplied by a contractor with a contract under this section for such category of drugs and biologicals and area; and

(B)

the physician has elected such contractor under paragraph (5) for such category and area.

(5)

Contractor selection process

(A)

Annual selection

(i)

In general

(ii)

Timing of selection

(B)

Information on contractors

(C)

Selecting physician defined

(b)

Program requirements

(1)

Contract for competitively biddable drugs and biologicals

(2)

Conditions for awarding contract

(A)

In general

The Secretary may not award a contract to any entity under the competition conducted in a competitive acquisition area pursuant to paragraph (1) with respect to the acquisition of competitively biddable drugs and biologicals within a category unless the Secretary finds that the entity meets all of the following with respect to the contract period involved:

(i)

Capacity to supply competitively biddable drug or biological within category

(I)

In general

(II)

Shipment methodology

(ii)

Quality, service, financial performance and solvency standards

The entity meets quality, service, financial performance, and solvency standards specified by the Secretary, including—

(I)

the establishment of procedures for the prompt response and resolution of complaints of physicians and individuals and of inquiries regarding the shipment of competitively biddable drugs and biologicals; and

(II)

a grievance and appeals process for the resolution of disputes.

(B)

Additional considerations

The Secretary may refuse to award a contract under this section, and may terminate such a contract, with an entity based upon—

(i)

the suspension or revocation, by the Federal Government or a State government, of the entity’s license for the distribution of drugs or biologicals (including controlled substances); or

(ii)

the exclusion of the entity under section 1320a–7 of this title from participation under this subchapter.

(C)

Application of Medicare Provider Ombudsman

(3)

Awarding multiple contracts for a category and area

The Secretary may limit (but not below 2) the number of qualified entities that are awarded such contracts for any category and area. The Secretary shall select among qualified entities based on the following:

(A)

The bid prices for competitively biddable drugs and biologicals within the category and area.

(B)

Bid price for distribution of such drugs and biologicals.

(C)

Ability to ensure product integrity.

(D)

Customer service.

(E)

Past experience in the distribution of drugs and biologicals, including controlled substances.

(F)

Such other factors as the Secretary may specify.

(4)

Terms of contracts

(A)

In general

(B)

Period of contracts

(C)

Integrity of drug and biological distribution system

A contractor (as defined in subsection (a)(2)(D)) shall—

(i)

acquire all drug and biological products it distributes directly from the manufacturer or from a distributor that has acquired the products directly from the manufacturer; and

(ii)

comply with any product integrity safeguards as may be determined to be appropriate by the Secretary.

Nothing in this subparagraph shall be construed to relieve or exempt any contractor from the provisions of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. 301 et seq.] that relate to the wholesale distribution of prescription drugs or biologicals.

(D)

Compliance with code of conduct and fraud and abuse rules

Under the contract—

(i)

the contractor shall comply with a code of conduct, specified or recognized by the Secretary, that includes standards relating to conflicts of interest; and

(ii)

the contractor shall comply with all applicable provisions relating to prevention of fraud and abuse, including compliance with applicable guidelines of the Department of Justice and the Inspector General of the Department of Health and Human Services.

(E)

Direct delivery of drugs and biologicals to physicians

Under the contract the contractor shall only supply competitively biddable drugs and biologicals directly to the selecting physicians and not directly to individuals, except under circumstances and settings where an individual currently receives a drug or biological in the individual’s home or other non-physician office setting as the Secretary may provide. The contractor shall not deliver drugs and biologicals to a selecting physician except upon receipt of a prescription for such drugs and biologicals, and such necessary data as may be required by the Secretary to carry out this section. This section does not—

(i)

require a physician to submit a prescription for each individual treatment; or

(ii)

change a physician’s flexibility in terms of writing a prescription for drugs or biologicals for a single treatment or a course of treatment.

(5)

Permitting access to drugs and biologicals

The Secretary shall establish rules under this section under which drugs and biologicals which are acquired through a contractor under this section may be used to resupply inventories of such drugs and biologicals which are administered consistent with safe drug practices and with adequate safeguards against fraud and abuse. The previous sentence shall apply if the physicians can demonstrate to the Secretary all of the following:

(A)

The drugs or biologicals are required immediately.

(B)

The physician could not have reasonably anticipated the immediate requirement for the drugs or biologicals.

(C)

The contractor could not deliver to the physician the drugs or biologicals in a timely manner.

(D)

The drugs or biologicals were administered in an emergency situation.

(6)

Construction

(c)

Bidding process

(1)

In general

(2)

Bid defined

(3)

Bidding on a national or regional basis

(4)

Uniformity of bids within area

(5)

Confidentiality of bids

The provisions of subparagraph (D) of section 1396r–8(b)(3) of this title shall apply to periods during which a bid is submitted with respect to a competitively biddable drug or biological under this section in the same manner as it applies to information disclosed under such section, except that any reference—

(A)

in that subparagraph to a “manufacturer or wholesaler” is deemed a reference to a “bidder” under this section;

(B)

in that section to “prices charged for drugs” is deemed a reference to a “bid” submitted under this section; and

(C)

in clause (i) of that section to “this section”, is deemed a reference to “part B of subchapter XVIII”.

(6)

Inclusion of costs

The bid price submitted in a contract offer for a competitively biddable drug or biological shall—

(A)

include all costs related to the delivery of the drug or biological to the selecting physician (or other point of delivery); and

(B)

include the costs of dispensing (including shipping) of such drug or biological and management fees, but shall not include any costs related to the administration of the drug or biological, or wastage, spillage, or spoilage.

(7)

Price adjustments during contract period; disclosure of costs

Each contract awarded shall provide for—

(A)

disclosure to the Secretary the contractor’s reasonable, net acquisition costs for periods specified by the Secretary, not more often than quarterly, of the contract; and

(B)

appropriate price adjustments over the period of the contract to reflect significant increases or decreases in a contractor’s reasonable, net acquisition costs, as so disclosed.

(d)

Computation of payment amounts

(1)

In general

(2)

Special rules

The Secretary shall establish rules regarding the use under this section of the alternative payment amount provided under section 1395w–3a of this title to the use of a price for specific competitively biddable drugs and biologicals in the following cases:

(A)

New drugs and biologicals

(B)

Other cases

(e)

Cost-sharing

(1)

Application of coinsurance

(2)

Deductible

(3)

Collection

(f)

Special payment rules

(1)

Use in exclusion cases

(2)

Application of requirement for assignment

(3)

Protection for beneficiary in case of medical necessity denial

(g)

Judicial review

There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise, of—

(1)

the establishment of payment amounts under subsection (d)(1);

(2)

the awarding of contracts under this section;

(3)

the establishment of competitive acquisition areas under subsection (a)(2)(C);

(4)

the phased-in implementation under subsection (a)(1)(B);

(5)

the selection of categories of competitively biddable drugs and biologicals for competitive acquisition under such subsection or the selection of a drug in the case of multiple source drugs; or

(6)

the bidding structure and number of contractors selected under this section.

(Aug. 14, 1935, ch. 531, title XVIII, § 1847B, as added Pub. L. 108–173, title III, § 303(d)(1), Dec. 8, 2003, 117 Stat. 2245; amended Pub. L. 109–432, div. B, title I, § 108(a), Dec. 20, 2006, 120 Stat. 2983.)

cite as: 42 USC 1395w-3b