42 USC 1395w-114b - Manufacturer rebate for certain drugs with prices increasing faster than inflation

U.S Code last checked for updates: Feb 21, 2025

§ 1395w–114b.

Manufacturer rebate for certain drugs with prices increasing faster than inflation

(a)

Requirements

(1)

Secretarial provision of information

Not later than 9 months after the end of each applicable period (as defined in subsection (g)(7)), subject to paragraph (3), the Secretary shall, for each part D rebatable drug, report to each manufacturer of such part D rebatable drug the following for such period:

(A)

The amount (if any) of the excess annual manufacturer price increase described in subsection (b)(1)(A)(ii) for each dosage form and strength with respect to such drug and period.

(B)

The rebate amount specified under subsection (b) for each dosage form and strength with respect to such drug and period.

(2)

Manufacturer requirements

(3)

Transition rule for reporting

(b)

Rebate amount

(1)

In general

(A)

Calculation

For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable period is, subject to subparagraph (C), paragraph (5)(B), and paragraph (6), the estimated amount equal to the product of—

(i)

subject to subparagraph (B) of this paragraph, the total number of units of such dosage form and strength for each rebatable covered part D drug dispensed under this part during the applicable period; and

(ii)

the amount (if any) by which—

(I)

the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the period; exceeds

(II)

the inflation-adjusted payment amount determined under paragraph (3) for such dosage form and strength with respect to such part D rebatable drug for the period.

(B)

Excluded units

(C)

Reduction or waiver for shortages and severe supply chain disruptions

The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part D rebatable drug and an applicable period—

(i)

in the case of a part D rebatable drug that is described as currently in shortage on the shortage list in effect under section 356e of title 21 at any point during the applicable period;

(ii)

in the case of a generic part D rebatable drug (described in subsection (g)(1)(C)(ii)) or a biosimilar (defined as a biological product licensed under section 262(k) of this title), when the Secretary determines there is a severe supply chain disruption during the applicable period, such as that caused by a natural disaster or other unique or unexpected event; and

(iii)

in the case of a generic Part 1

D rebatable drug (as so described), if the Secretary determines that without such reduction or waiver, the drug is likely to be described as in shortage on such shortage list during a subsequent applicable period.

(2)

Determination of annual manufacturer price

The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—

(A)

the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such period; and

(B)

the ratio of—

(i)

the total number of units of such dosage form and strength reported under section 1396r–8 of this title with respect to each such calendar quarter of such period; to

(ii)

the total number of units of such dosage form and strength reported under section 1396r–8 of this title with respect to such period, as determined by the Secretary.

(3)

Determination of inflation-adjusted payment amount

The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable period, subject to paragraph (5), is—

(A)

the benchmark period manufacturer price determined under paragraph (4) for such dosage form and strength with respect to such drug and period; increased by

(B)

the percentage by which the applicable period CPI–U (as defined in subsection (g)(5)) for the period exceeds the benchmark period CPI–U (as defined in subsection (g)(4)).

(4)

Determination of benchmark period manufacturer price

The benchmark period manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—

(A)

(B)

the ratio of—

(i)

the total number of units reported under section 1396r–8 of this title of such dosage form and strength with respect to each such calendar quarter of such payment amount benchmark period; to

(ii)

the total number of units reported under section 1396r–8 of this title of such dosage form and strength with respect to such payment amount benchmark period.

(5)

Special treatment of certain drugs and exemption

(A)

Subsequently approved drugs

(B)

Treatment of new formulations

(i)

In general

(ii)

Line extension defined

(C)

Selected drugs

(6)

Reconciliation in case of revised information

(c)

Rebate deposits

(d)

Information

For purposes of carrying out this section, the Secretary shall use information submitted by—

(1)

manufacturers under section 1396r–8(b)(3) of this title;

(2)

States under section 1396r–8(b)(2)(A) of this title; and

(3)

PDP sponsors of prescription drug plans and MA organization offering MA–PD plans under this part.

(e)

Civil money penalty

(f)

Limitation on administrative or judicial review

There shall be no administrative or judicial review of any of the following:

(1)

The determination of units under this section.

(2)

The determination of whether a drug is a part D rebatable drug under this section.

(3)

The calculation of the rebate amount under this section.

(g)

Definitions

In this section:

(1)

Part D rebatable drug

(A)

In general

(B)

Exclusion

(i)

In general

(ii)

Increase

The dollar amount applied under clause (i)—

(I)

for the applicable period beginning October 1, 2023, shall be the dollar amount specified under such clause for the applicable period beginning October 1, 2022, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of 2023; and

(II)

for a subsequent applicable period, shall be the dollar amount specified in this clause for the previous applicable period, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of the previous period.

Any dollar amount specified under this clause that is not a multiple of $10 shall be rounded to the nearest multiple of $10.

(C)

Drug or biological described

A drug or biological described in this subparagraph is a drug or biological that, as of the first day of the applicable period involved, is—

(i)

a drug approved under a new drug application under section 355(c) of title 21;

(ii)

a drug approved under an abbreviated new drug application under section 355(j) of title 21, in the case where—

(I)

the reference listed drug approved under section 355(c) of title 21, including any “authorized generic drug” (as that term is defined in section 355(t)(3) of title 21), is not being marketed, as identified in the Food and Drug Administration’s National Drug Code Directory;

(II)

there is no other drug approved under section 355(j) of title 21 that is rated as therapeutically equivalent (under the Food and Drug Administration’s most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”) and that is being marketed, as identified in the Food and Drug Administration’s National Drug Code Directory;

(III)

the manufacturer is not a “first applicant” during the “180-day exclusivity period”, as those terms are defined in section 355(j)(5)(B)(iv) of title 21; and

(IV)

the manufacturer is not a “first approved applicant” for a competitive generic therapy, as that term is defined in section 355(j)(5)(B)(v) of title 21; or

(iii)

a biological licensed under section 262 of this title.

(2)

Unit

(3)

Payment amount benchmark period

(4)

Benchmark period CPI–U

(5)

Applicable period CPI–U

(6)

Average manufacturer price

(7)

Applicable period

(h)

Implementation for 2022, 2023, and 2024

(Aug. 14, 1935, ch. 531, title XVIII, § 1860D–14B, as added Pub. L. 117–169, title I, § 11102(a), Aug. 16, 2022, 136 Stat. 1871.)

cite as: 42 USC 1395w-114b