The Charter can be found at DISCLAIMER: The contents of this database lack the force and effect of law, except as We interpreted this section expansively as the statute refers to a manufacturer's lowest price available to any entity on this statutory list. This document has been published in the Federal Register. on the guidance repository, except to establish historical facts. Civil monetary penalties (CMPs). When we established a regulatory definition of an N drug in the July 17, 2007 final rule, we did so to distinguish between multiple source drugs approved under an ANDA (generally referenced as N drugs) and multiple source drugs approved under an NDA (that is, S or I drugs). We propose to use our authority under sections 1102 and 1902(a)(4) of the Act to require efficient handling of disputes by limiting the period for manufacturers to initiate disputes, hearing requests and audits concerning State-specified COD utilization data to 12 quarters from the last day of the quarter from the date of the State invoice. Start Printed Page 34239 The provision for drug cost transparency in Medicaid Managed Care Contracts would benefit States and the Federal Government. lock The term single source drug means a covered outpatient drug, including a drug product approved for marketing as a non-prescription drug that is regarded as a covered outpatient drug under paragraph (4), which is produced or distributed under a new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application unless the Secretary determines that a narrow exception applies (as described in, Innovator Multiple Source Drug affordable services to our clients. Section 1927(b)(2)(B) of the Act provides that a manufacturer may audit the rebate billing information provided by the State as set forth under section 1927(b)(2)(A) of the Act on the total number of units of each dosage form, strength and package size of each COD dispensed and paid for under the State Plan during a rebate period, and authorizes that adjustments to rebates shall be made to the extent that the information provided by States indicates that utilization was greater or less than the amount previously specified. 39. An alternative considered was to not clarify this provision; however, then disputes initiated on claims would continue to be disputed ongoing for any defined time-period, causing undue strain, work hours and costs on rebate programs, which directly counters the purpose of the program to offset the Federal and State costs of most outpatient prescription drugs dispensed to Medicaid patients. Your input is important. These new OIG authorities will not be the subject of this rulemaking. Section 1927(c)(4)(C)(i) and (ii) of the Act requires information on CODs that have been identified as misclassified be reported to Congress on an annual basis, and that the annual report be made available to the public on a public website. 26. The manufacturer will use identifying documentation about payment from the State's records which may include, for example, the labeler code, the labeler name, the quarter and applicable Federal program(s) covered by the payment, or any other such pertinent information that would help identify from whom the rebate payment is being sent and for which quarter and Federal program the payment applies. In addition, going forward, manufacturers will have to identify when their first sales of the COD occur to accurately identify the market date of the COD. Since the aforementioned pricing data that manufacturers report to us under section 1927(b)(3)(A) of the Act (AMP, ASP, WAC) are often used by States for reimbursement under Medicaid, serve as a basis for payment to providers for CODs, including physician administered drugs, and thus have a significant impact on how much the Federal Government pays for CODs under Medicaid, CMS must ensure, in accordance with section 1902(a)(30)(A) of the Act, that Medicaid payments for CODs based on these reported prices, are made in an economical and efficient, as well as sufficient manner, to provide access to care. https://www.regulations.gov. While there are several validation checks, we cannot predict how many, if any, drugs are or would be misclassified especially since the amount would also include penalties for misclassification of future drugs that have yet to be released to market. We are proposing to limit the time period for manufacturers to initiate disputes, hearing requests and audits of State-invoiced utilization data to 12 quarters from the last day of the quarter from the date of State invoice to the manufacturer. ", "We are taking bold actions to strengthen school-based health care services through our Medicaid program so that children in every community have the support they need," said HHS Secretary Xavier Becerra. The 2019 CIB is clear that when the subcontractor, in this case the PBM, is performing administrative functions such as eligibility and coverage verification, claims processing, utilization review, or network development, the expenditures and profits on these functions are a non-claims administrative expense as described in 438.8(e)(2)(v)(A), and should not be counted as an incurred claim for the purposes of MLR calculations. In this proposal, CMS proposed to interpret the term manufacturer to specify that if a corporation meets the statutory definition of manufacturer (that is, section 1927(k)(5) of the Act) and possesses legal title to the NDC, the agency would consider the term to include associated companies, including parent corporations, brother-sister corporations, and subsidiary corporations. documents in the last year, 909 Advice for the next CMS administrator's first 100 days 3. As discussed in section II.C.1.d. regulatory information on FederalRegister.gov with the objective of This provision will not impose substantial costs on States. Section 447.502(a)(2) further specifies that as of January 1, 2007, a State must require providers to submit claims for single source and the top 20 multiple source PADs identified by the Secretary, using NDC codes. "These new resources and proposed rules will help schools live up to the promise that all students, including thosewith disabilities, receive a free, appropriate public education. We are soliciting comments relating to this provision. Since we believe that this is a usual and customary business practice that is exempt from the PRA (see 5 CFR 1320.3(b)(2)), we are not setting out such burden for managed care entities to program the new codes onto the cards and to issue such cards under this section of the preamble. 23. We also explained that if a manufacturer offers multiple price concessions to two entities for the same drug transaction, such as rebates to a PBM where the rebates are designed to adjust prices at the retail or provider level, in addition to discounts to a retail community pharmacy's final drug price, all discounts related to that transaction which adjust the price available from the manufacturer should be considered in the final price of that drug when determining best price (81 FR 5252 through 5253). Section 433.139(b)(3)(i) and (b)(3)(ii)(B) detail the exception to standard COB cost avoidance by allowing pay and chase for certain types of care, as well as the timeframe allowed prior to Medicaid paying claims for certain types of care. The manufacturer must make findings that include actual data as evidence that the prior manufacturer violated statute or regulation. . This means the market date of a drug is the date that the drug was first marketed, regardless of the entity that marketed the drug. This section would make it clear that States are required to invoice for rebates for multiple source PADs on this list to receive Federal matching funds and to secure rebates. On an annual basis, CMS will compile a list of single source covered outpatient drugs that may be subject to a survey based on one or more of the following criteria (further refined based upon criteria in paragraph (k)(3) of this section). 51. Contact Information: Please use the telephone numbers and e-mail addresses listed below. This provision would allow us to consider both these situations to be misclassifications, subject to the penalties that are identified in the statute, and that we further describe in the proposed regulation. As first described in the Medicaid Program; Payment for Covered Outpatient Drugs Under Drug Rebate Agreements With Manufacturers proposed rule (95 FR 48442; hereinafter referenced as the 1995 proposed rule), we have noted our intent that each associated manufacturer's labeler codes would have to have an effectuated rebate agreement in order for the single manufacturer to be considered to be in compliance with the requirement under section 1927(a)(1) of the Act that a manufacturer have a rebate agreement in effect. Furthermore, it is unlikely that CODs with an MFP would be selected for the proposed drug price verification survey under section 1927(b)(3)(B) of the Act because we expect that our proposal would verify drug prices that are more recently marketed high cost drugs not typically dispensed at non-retail community pharmacies, while drugs for which an MFP has been negotiated must have been approved for at least 7 years, in the case of drugs approved and marketed under section 505(c) of the FFDCA, or licensed for at least 11 in the case of biological products that are licensed and marketed under section 351 of the PHS Act. Additionally, we are proposing a new paragraph (h), Participation in the Medicaid Drug Rebate Program (MDRP), in 447.510 to further specify the responsibilities of a manufacturer, specifying in 447.510(h)(1) that manufacturers participating in the MDRP must have a signed rebate agreement that complies with paragraph (5) in the definition of the manufacturer in 447.502. In addition to retail community and closed-door specialty pharmacies, other provider types may dispense and/or administer drugs dispensed in non-retail community pharmacy settings to Medicaid beneficiaries. 2. If a manufacturer fails to comply with paragraph (d)(2) of this section within 30 calendar days from the date of the notification by the agency of the misclassification to the manufacturer under paragraph (d)(1) of this section, fails to pay the rebates that are due to the States as a result of the misclassification within 60 calendar days from the date of the notification, if applicable, and/or fails to provide to the agency such documentation that such rebates have been paid, as described in paragraph (d)(3) of this section, the agency may do any or all of the following: (i) Correct the misclassification of the drug in the system on behalf of the manufacturer, using any pricing and drug product information that may have been provided by the manufacturer. the drug manufactures referred to in this proposed rule fall into both NAICS 325412, Pharmaceutical Preparation Manufacturing and NAICS 325414, Biologic Product (except Diagnostic) Manufacturing. Consistent with section 1927(b)(2)(B) of the Act, adjustments to rebates are made to the extent that the audit results in information indicating that utilization was greater or less than the amount previously specified by the State in its rebate invoice, and can result in manufacturers owing additional rebate Manufacturers that participate in MDRP must meet the following requirements: (1) States would receive additional monetary rebates if a noncompliant manufacturer comes into compliance. 422 (2017). States also need to ensure that their managed care plans report required drug utilization data in order for States to invoice manufacturers for rebates for CODs, consistent with 438.3(s)(2) and (3), which were adopted in the 2016 Medicaid Managed Care final rule. [24] this will NOT be posted on regulations.gov. For a rebate period beginning after December 31, 2009, and before January 1, 2024, in no case will the total rebate amount exceed 100 percent of the AMP of the single source or innovator multiple source drug. [49] 8. documents, we are not able to acknowledge or respond to them individually. We estimate that only one percent of manufacturers would submit a request for a recalculation annually outside of the 12-quarters. For example, manufacturers have the opportunity to request that certain drugs be classified in the MDP as a noninnovator multiple source drug instead of a single source or innovator multiple source drug. As such, this is an unquantifiable cost to States and therefore, we have not included an estimate. (e) of the NDRA, termination shall not affect the manufacturer's liability for the payment of rebates due under the agreement before the termination effective date. We propose to define drug product information in 447.502 as information that includes, but is not limited to, NDC number, drug name, units per package size (UPPS), drug category (S, I, N), unit type (for example, TAB, CAP, ML, EA), drug type (prescription, over-the counter), base date AMP, therapeutic equivalent code (TEC), line extension drug indicator, 5i indicator and route of administration, if applicable, FDA approval date and application number or OTC monograph citation if applicable, market date, COD status, and any other information deemed necessary by the agency to perform accurate URA calculations. It is a usual and customary business practice for the MCOs, PIHPs, and PAHPs to routinely issue identification cards for pharmacy benefits, as they do routinely for all of their lines of business across the industry, to include commercial/private and public sector programs, such as Medicare and Medicaid. (B) 23.1 percent of the AMP for the dosage form and strength of such misclassified drug for that period. Moreover, this lack of transparency makes it more difficult for Medicaid managed care plans to assure that the plan's MLR calculation is limited to the true medical costs associated with the provision of CODs. (3) A covered outpatient drug that entered the market before 1962 that is not marketed under an NDA; Vaccine Therefore, CODs covered by MCOs, PIHPs, and PAHPs are within the scope of this provision designed to prevent duplicate discounts. The authority citation for part 447 continues to read as follows: Authority: Start Printed Page 34254 That's more than 41 million children spending over 30 hours weekly in school during most of the year. The implementing regulations for the determination of best price are found at 447.505, and we propose to revise 447.505(d)(3) to add language to make clearer that the manufacturer must adjust the best price for a drug for a rebate period if cumulative discounts, rebates, or other arrangements to best price eligible entities subsequently adjust the prices available from the manufacturer, and that those discounts, rebates, or other arrangements must be stacked for a single transaction to determine a final price realized by the manufacturer for a drug. Consistent with the statute, the market date of a drug is not and cannot be based on the first date upon which a subsequent manufacturer first markets the drug, but rather the earliest date on which the drug was first marketed, by any manufacturer, or under any NDC. This unique system role gives a user access to all system portlets, and all dotCMS objects regardless of the role permissions on those objects. After the COD final rule was issued, we issued further guidance to States in the State Medicaid Directors Letter, SHO #16001, dated February 11, 2016, and Frequently Asked Questions (FAQs), dated July 6, 2016. Upon notification by CMS that the manufacturer's information was updated in the system, we propose that the manufacturer certify the applicable price and drug product data. Administrator | CMS - Centers for Medicare & Medicaid Services the material on FederalRegister.gov is accurately displayed, consistent with Section 3(f) of Executive Order 12866 defines a significant regulatory action as an action that is likely to result in a rule: (1) having an annual effect on the economy of $200 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising legal or policy issues or which centralized review would meaningfully further the President's priorities or the principles set forth in the Executive order. Any manufacturer with a signed rebate agreement in effect that acquires or purchases another labeler, acquires or purchases covered outpatient drugs from another labeler code, or forms a new subsidiary, must ensure that a signed rebate agreement is in effect for these entities or covered outpatient drugs, consistent with the definition of See 447.510(b)(1)(i) through (vi). STAT Op-Ed by Christi A. Grimm & Julie K. Taitsman | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services ( If the manufacturer is terminated for noncompliance, they can come back into the program under certain conditions, including resolving all compliance issues. Thus, once we review a request for a rebate agreement and the manufacturer confirms, among other things, that all of a manufacturer's CODs are listed, a rebate agreement will be issued. (j) With this provision, States would no longer have to look back at and research paper claims dating back to as early as 1991 and the origin of the Medicaid Drug Rebate Program. In the absence of Medicaid-specific BIN, PCN, and group numbers to identify beneficiaries as being Medicaid participants, it is difficult for pharmacies and other providers, such as physicians and hospitals that administer drugs to Medicaid beneficiaries, to determine whether the beneficiary is enrolled in a Medicaid managed care plan, since a group number alone is not sufficient for Medicaid identification. As technology and systems are currently in place, this proposed regulation would reduce the administrative burden of monitoring any revisions to the top 20 multiple source PADs and allow States to secure rebates for these PADs that are CODs. To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues: We are soliciting public comment (see section III.D. These proposals would help to strengthen and preserve the foundation of the MDRP by ensuring proper payments so Federal expenditures are spent appropriately on delivering quality, necessary care, while also ensuring sufficient access to care for Medicaid beneficiaries. [25] and information from FDA's Drugs@FDA web page See Buy products from these advertisers! As part of a manufacturer's evaluation of their NDCs for compliance with accurate drug product information reporting, they should ensure that each NDC is reported with an accurate market date. For each medical and health service manager (Code 119111) that reviews the proposed rule, the estimated cost is (3.833 $115.22) or $441.64. As a result, the plan may not know whether the PBM is being appropriately compensated for administering the COD benefit. Therefore, direct reimbursement may be reimbursement for a drug alone, or reimbursement for a drug plus the service, in one inclusive payment, if the drug plus the itemized cost of the drug are separately identified on the claim. For the same contract changes between the MCOs and the subcontractors (mainly PBMs), we also estimate a one-time private sector burden of 7,050 hours (282 managed care plans 25 hr/response) at a cost of $649,587 (7,050 hr $92.14/hr). The States would be given 30 calendar days' notice before such a suspension is implemented. 1302 and 1396r8. You may submit electronic comments on this regulation to and services, go to documents in the last year, 960 [12] We believe our proposed drug price verification survey process, along with the NADAC that we publish for retail community pharmacy costs, should provide CMS and the States a clearer understanding into a manufacturer's pricing for its covered outpatient drug to verify those prices and charges, and ensure that Medicaid payments are made in an economical and efficient, as well as sufficient manner, to provide access to care. A covered outpatient drug that is produced or distributed under an original new drug application (NDA) approved by the FDA, including a drug product marketed by any cross-licensed producers or distributors operating under the NDA. Presentations and Written Comments: 9. . This prototype edition of the 447.502 2. This additional information would likely be specific to each individual covered outpatient drug and may include additional requests associated with changes to the pharmaceutical marketplace. Per 438.3(s)(2) and (3), an MCO, PIHP or PAHP that covers CODs under its Medicaid managed care contract must (1) report drug utilization data to the State that is necessary for the State to bill manufacturers for rebates under section 1927 of the Act using NDC numbers for all CODs, including all single and multiple source PADs; and, (2) establish procedures to exclude utilization data for covered outpatient drugs that are subject to discounts under the 340B Drug Pricing Program from those reports if the State does not require submission of managed care drug claims data from covered entities directly to the State. proper and efficient operation. Having States require their MCOs, PIHPs, or PAHPs that provide CODs to Medicaid beneficiaries to add these types of unique identifiers to the identification cards would make the Medicaid drug program run more efficiently, and improve the level of pharmacy services provided to Medicaid beneficiaries. While we provide URAs to the States each quarter to help facilitate billing manufacturers for rebates, it is ultimately the manufacturer's responsibility to assure that accurate rebates are paid to States for their CODs. Medicare Part B and State Medicaid agencies, to pay for drugs for beneficiaries, as well as calculate rebates paid by manufacturers to States under MDRP. It also includes a covered outpatient drug approved under a BLA, PLA, ELA, or ADA. In addition to affecting Medicaid coverage of a manufacturer's drugs, the termination of the manufacturer's NDRA may impact the coverage of the drugs under the Medicare Part B program as well as the 340B Drug Pricing Program. The only situation in which a drug that is produced or marketed under an NDA may be reported as a noninnovator drug is if a narrow exception was granted by CMS in accordance with the process established in the COD final rule. We also know that childrenhave suffered serious declines in access to mental and behavioral health care services during the COVID-19 pandemic. Therefore, we are proposing that MCOs, PIHPs, and PAHPs that provide coverage of CODs structure any contract with any subcontractor to require the subcontractor report the amounts related to the incurred claims described in 438.8(e)(2), such as reimbursement for the covered outpatient drug, payments for other patient services, and the fees paid to providers or pharmacies for dispensing or administer a covered outpatient drug, separately from any administrative costs, fees, and expenses of the subcontractor. L. 115123, enacted February 9, 2018) amended the TPL provision at section 1902(a)(25) of the Act. State Release Number 45 sets forth the Dispute Resolution Process for manufacturers and States to follow when engaged in a dispute. Some drug companies that have several divisions have more than one labeler code, and a single manufacturer may be marketing its drugs across or under multiple labeler codes.
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