Collapse to view only § 1320f-2. Manufacturer agreements
- § 1320f. Establishment of program
- § 1320f-1. Selection of negotiation-eligible drugs as selected drugs
- § 1320f-2. Manufacturer agreements
- § 1320f-3. Negotiation and renegotiation process
- § 1320f-4. Publication of maximum fair prices
- § 1320f-5. Administrative duties and compliance monitoring
- § 1320f-6. Civil monetary penalties
- § 1320f-7. Limitation on administrative and judicial review
§ 1320f. Establishment of program
(a) In generalThe Secretary shall establish a Drug Price Negotiation Program (in this part referred to as the “program”). Under the program, with respect to each price applicability period, the Secretary shall—
(1) publish a list of selected drugs in accordance with section 1320f–1 of this title;
(2) enter into agreements with manufacturers of selected drugs with respect to such period, in accordance with section 1320f–2 of this title;
(3) negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, in accordance with section 1320f–3 of this title; 1
1 So in original. Probably should be followed by “and”.
(4) carry out the publication and administrative duties and compliance monitoring in accordance with sections 1320f–4 and 1320f–5 of this title.
(b) Definitions relating to timingFor purposes of this part:
(1) Initial price applicability year
(2) Price applicability period
(3) Selected drug publication date
(4) Negotiation periodThe term “negotiation period” means, with respect to an initial price applicability year with respect to a selected drug, the period—
(A) beginning on the sooner of—
(i) the date on which the manufacturer of the drug and the Secretary enter into an agreement under section 1320f–2 of this title with respect to such drug; or
(ii) February 28 following the selected drug publication date with respect to such selected drug; and
(B) ending on November 1 of the year that begins 2 years prior to the initial price applicability year.
(c) Other definitionsFor purposes of this part:
(1) Manufacturer
(2) Maximum fair price eligible individualThe term “maximum fair price eligible individual” means, with respect to a selected drug—
(A) in the case such drug is dispensed to the individual at a pharmacy, by a mail order service, or by another dispenser, an individual who is enrolled in a prescription drug plan under part D of subchapter XVIII or an MA–PD plan under part C of such subchapter if coverage is provided under such plan for such selected drug; and
(B) in the case such drug is furnished or administered to the individual by a hospital, physician, or other provider of services or supplier, an individual who is enrolled under part B of subchapter XVIII, including an individual who is enrolled in an MA plan under part C of such subchapter, if payment may be made under part B for such selected drug.
(3) Maximum fair price
(4) Reference product
(5) Total expenditures
(6) Unit
(d) Timing for initial price applicability year 2026Notwithstanding the provisions of this part, in the case of initial price applicability year 2026, the following rules shall apply for purposes of implementing the program:
(1) Subsection (b)(3) shall be applied by substituting “September 1, 2023” for “, with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year”.
(2) Subsection (b)(4) shall be applied—
(A) in subparagraph (A)(ii), by substituting “October 1, 2023” for “February 28 following the selected drug publication date with respect to such selected drug”; and
(B) in subparagraph (B), by substituting “August 1, 2024” for “November 1 of the year that begins 2 years prior to the initial price applicability year”.
(3)Section 1320f–1 of this title shall be applied—
(A) in subsection (b)(1)(A), by substituting “during the period beginning on June 1, 2022, and ending on May 31, 2023” for “during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available”; and
(B) in subsection (d)(1)(A), by substituting “during the period beginning on June 1, 2022, and ending on May 31, 2023” for “during the most recent period for which data are available of at least 12 months prior to the selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date), with respect to such year”.2
2 So in original. Probably should read as follows: “during the most recent 12-month period for which data are available prior to such selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date)”.
(4)Section 1320f–2(a) of this title shall be applied by substituting “October 1, 2023” for “February 28 following the selected drug publication date with respect to such selected drug”.
(5)Section 1320f–3(b)(2) of this title shall be applied—
(A) in subparagraph (A), by substituting “October 2, 2023” for “March 1 of the year of the selected drug publication date, with respect to the selected drug”;
(B) in subparagraph (B), by substituting “February 1, 2024” for “the June 1 following the selected drug publication date”; and
(C) in subparagraph (E), by substituting “August 1, 2024” for “the first day of November following the selected drug publication date, with respect to the initial price applicability year”.
(6)Section 1320f–4(a)(1) of this title shall be applied by substituting “September 1, 2024” for “November 30 of the year that is 2 years prior to such initial price applicability year”.
(Aug. 14, 1935, ch. 531, title XI, § 1191, as added Pub. L. 117–169, title I, § 11001(a), Aug. 16, 2022, 136 Stat. 1833.)
§ 1320f–1. Selection of negotiation-eligible drugs as selected drugs
(a) In generalNot later than the selected drug publication date with respect to an initial price applicability year, in accordance with subsection (b), the Secretary shall select and publish a list of—
(1) with respect to the initial price applicability year 2026, 10 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year (or, all (if such number is less than 10) such negotiation-eligible drugs with respect to such year);
(2) with respect to the initial price applicability year 2027, 15 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year);
(3) with respect to the initial price applicability year 2028, 15 negotiation-eligible drugs described in subparagraph (A) or (B) of subsection (d)(1) with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year); and
(4) with respect to the initial price applicability year 2029 or a subsequent year, 20 negotiation-eligible drugs described in subparagraph (A) or (B) of subsection (d)(1), with respect to such year (or, all (if such number is less than 20) such negotiation-eligible drugs with respect to such year).
Subject to subsection (c)(2) and section 1320f–3(f)(5) of this title, each drug published on the list pursuant to the previous sentence and subsection (b)(3) shall be subject to the negotiation process under section 1320f–3 of this title for the negotiation period with respect to such initial price applicability year (and the renegotiation process under such section as applicable for any subsequent year during the applicable price applicability period).
(b) Selection of drugs
(1) In generalIn carrying out subsection (a), subject to paragraph (2), the Secretary shall, with respect to an initial price applicability year, do the following:
(A) Rank negotiation-eligible drugs described in subsection (d)(1) according to the total expenditures for such drugs under parts B and D of subchapter XVIII, as determined by the Secretary, during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available, with the negotiation-eligible drugs with the highest total expenditures being ranked the highest.
(B) Select from such ranked drugs with respect to such year the negotiation-eligible drugs with the highest such rankings.
(C) In the case of a biological product for which the inclusion of the biological product as a selected drug on a list published under subsection (a) has been delayed under subsection (f)(2), remove such biological product from the rankings under subparagraph (A) before making the selections under subparagraph (B).
(2) High spend part D drugs for 2026 and 2027
(3) Inclusion of delayed biological products
(c) Selected drug
(1) In generalFor purposes of this part, in accordance with subsection (e)(2) and subject to paragraph (2), each negotiation-eligible drug included on the list published under subsection (a) with respect to an initial price applicability year shall be referred to as a “selected drug” with respect to such year and each subsequent year beginning before the first year that begins at least 9 months after the date on which the Secretary determines at least one drug or biological product—
(A) is approved or licensed (as applicable)—
(i) under section 355(j) of title 21 using such drug as the listed drug; or
(ii) under section 262(k) of this title using such drug as the reference product; and
(B) is marketed pursuant to such approval or licensure.
(2) ClarificationA negotiation-eligible drug—
(A) that is included on the list published under subsection (a) with respect to an initial price applicability year; and
(B) for which the Secretary makes a determination described in paragraph (1) before or during the negotiation period with respect to such initial price applicability year;
shall not be subject to the negotiation process under section 1320f–3 of this title with respect to such negotiation period and shall continue to be considered a selected drug under this part with respect to the number of negotiation-eligible drugs published on the list under subsection (a) with respect to such initial price applicability year.
(d) Negotiation-eligible drug
(1) In generalFor purposes of this part, subject to paragraph (2), the term “negotiation-eligible drug” means, with respect to the selected drug publication date with respect to an initial price applicability year, a qualifying single source drug, as defined in subsection (e), that is described in either of the following subparagraphs (or, with respect to the initial price applicability year 2026 or 2027, that is described in subparagraph (A)):
(A) Part D high spend drugs
(B) Part B high spend drugs
(2) Exception for small biotech drugs
(A) In generalSubject to subparagraph (C), the term “negotiation-eligible drug” shall not include, with respect to the initial price applicability years 2026, 2027, and 2028, a qualifying single source drug that meets either of the following:
(i) Part D drugsThe total expenditures for the qualifying single source drug under part D of subchapter XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021—(I) are equal to or less than 1 percent of the total expenditures under such part D, as so determined, for all covered part D drugs (as defined in section 1395w–102(e) of this title) during such year; and(II) are equal to at least 80 percent of the total expenditures under such part D, as so determined, for all covered part D drugs for which the manufacturer of the drug has an agreement in effect under section 1395w–114a of this title during such year.
(ii) Part B drugsThe total expenditures for the qualifying single source drug under part B of subchapter XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021—(I) are equal to or less than 1 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs for which payment may be made under such part B during such year; and(II) are equal to at least 80 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs of the manufacturer for which payment may be made under such part B during such year.
(B) Clarifications relating to manufacturers
(i) Aggregation rule
(ii) Limitation
(C) Drugs not included as small biotech drugs
(3) Clarifications and determinations
(A) Previously selected drugs and small biotech drugs excludedIn applying subparagraphs (A) and (B) of paragraph (1), the Secretary shall not consider or count—
(i) drugs that are already selected drugs; and
(ii) for initial price applicability years 2026, 2027, and 2028, qualifying single source drugs described in paragraph (2)(A).
(B) Use of data
(e) Qualifying single source drug
(1) In generalFor purposes of this part, the term “qualifying single source drug” means, with respect to an initial price applicability year, subject to paragraphs (2) and (3), a covered part D drug (as defined in section 1395w–102(e) of this title) that is described in any of the following or a drug or biological product for which payment may be made under part B of subchapter XVIII that is described in any of the following:
(A) Drug productsA drug—
(i) that is approved under section 355(c) of title 21 and is marketed pursuant to such approval;
(ii) for which, as of the selected drug publication date with respect to such initial price applicability year, at least 7 years will have elapsed since the date of such approval; and
(iii) that is not the listed drug for any drug that is approved and marketed under section 355(j) of such title.
(B) Biological productsA biological product—
(i) that is licensed under section 262(a) of this title and is marketed under section 262 of this title;
(ii) for which, as of the selected drug publication date with respect to such initial price applicability year, at least 11 years will have elapsed since the date of such licensure; and
(iii) that is not the reference product for any biological product that is licensed and marketed under section 262(k) of this title.
(2) Treatment of authorized generic drugs
(A) In general
(B) Authorized generic drug definedFor purposes of this paragraph, the term “authorized generic drug” means—
(i) in the case of a drug, an authorized generic drug (as such term is defined in section 355(t)(3) of title 21); and
(ii) in the case of a biological product, a product that—(I) has been licensed under section 262(a) of this title; 1
1 See References in Text note below.
and(II) is marketed, sold, or distributed directly or indirectly to retail class of trade under a different labeling, packaging (other than repackaging as the reference product in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the reference product.(3) ExclusionsIn this part, the term “qualifying single source drug” does not include any of the following:
(A) Certain orphan drugs
(B) Low spend medicare drugsA drug or biological product with respect to which the total expenditures under parts B and D of subchapter XVIII, as determined by the Secretary in accordance with subsection (d)(3)(B)—
(i) with respect to initial price applicability year 2026, is less than, during the period beginning on June 1, 2022, and ending on May 31, 2023, $200,000,000;
(ii) with respect to initial price applicability year 2027, is less than, during the most recent 12-month period applicable under subparagraphs (A) and (B) of subsection (d)(1) for such year, the dollar amount specified in clause (i) increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the period beginning on June 1, 2023, and ending on September 30, 2024; or
(iii) with respect to a subsequent initial price applicability year, is less than, during the most recent 12-month period applicable under subparagraphs (A) and (B) of subsection (d)(1) for such year, the dollar amount specified in this subparagraph for the previous initial price applicability year increased by the annual percentage increase in such consumer price index for the 12-month period ending on September 30 of the year prior to the year of the selected drug publication date with respect to such subsequent initial price applicability year.
(C) Plasma-derived products
(f) Special rule to delay selection and negotiation of biologics for biosimilar market entry
(1) Application
(A) In general
(B) Request required
(i) In generalThe Secretary shall not provide for a delay under—(I) paragraph (2)(A) unless a request is made for such a delay by a manufacturer of a biosimilar biological product prior to the selected drug publication date for the list published under subsection (a) with respect to the initial price applicability year for which the biological product may have been included as a selected drug on such list but for subparagraph (2)(A); or(II) paragraph (2)(B)(iii) unless a request is made for such a delay by such a manufacturer prior to the selected drug publication date for the list published under subsection (a) with respect to the initial price applicability year that is 1 year after the initial price applicability year for which the biological product described in subsection (a) would have been included as a selected drug on such list but for paragraph (2)(A).
(ii) Information and documents(I) In generalA request made under clause (i) shall be submitted to the Secretary by such manufacturer at a time and in a form and manner specified by the Secretary, and contain—(aa) information and documents necessary for the Secretary to make determinations under this subsection, as specified by the Secretary and including, to the extent available, items described in subclause (III); and(bb) all agreements related to the biosimilar biological product filed with the Federal Trade Commission or the Assistant Attorney General pursuant to subsections (a) and (c) of section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.(II) Additional information and documents(III) Items describedThe items described in this clause are the following:(aa) The manufacturing schedule for such biosimilar biological product submitted to the Food and Drug Administration during its review of the application under such section 262(k) of this title.(bb) Disclosures (in filings by the manufacturer of such biosimilar biological product with the Securities and Exchange Commission required under section 78l(b), 78l(g), 78m(a), or 78o(d) of title 15 about capital investment, revenue expectations, and actions taken by the manufacturer that are typical of the normal course of business in the year (or the 2 years, as applicable) before marketing of a biosimilar biological product) that pertain to the marketing of such biosimilar biological product, or comparable documentation that is distributed to the shareholders of privately held companies.
(C) Aggregation rule
(i) In general
(ii) Partnership defined
(2) Rules describedThe rules described in this paragraph are the following:
(A) Delayed selection and negotiation for 1 year
(B) If not licensed and marketed during the initial delay
(i) In generalIf, during the time period between the selected drug publication date on which the biological product would have been included on the list as a selected drug pursuant to subsection (a) but for subparagraph (A) and the selected drug publication date with respect to the initial price applicability year that is 1 year after the initial price applicability year for which such biological product would(I) reevaluate whether there is a high likelihood (as described in paragraph (3)) that such biosimilar biological product will be licensed and marketed under such section 262(k) before the date that is 2 years after the selected drug publication date for which such biological product would have been included as a selected drug on such list published but for subparagraph (A); and(II) evaluate whether, on the basis of clear and convincing evidence, the manufacturer of such biosimilar biological product has made a significant amount of progress (as determined by the Secretary) towards both such licensure and the marketing of such biosimilar biological product (based on information from items described in subclauses (I)(bb) and (II) of paragraph (1)(B)(ii)) since the receipt by the Secretary of the request made by such manufacturer under paragraph (1)(B)(i)(I).
(ii) Selection and negotiationIf the Secretary determines that there is not a high likelihood that such biosimilar biological product will be licensed and marketed as described in clause (i)(I) or there has not been a significant amount of progress as described in clause (i)(II)—(I) the Secretary shall include the biological product as a selected drug on the list published under subsection (a) with respect to the initial price applicability year that is 1 year after the initial price applicability year for which such biological product would have been included as a selected drug on such list but for subparagraph (A); and(II) the manufacturer of such biological product shall pay a rebate under paragraph (4) with respect to the year for which such manufacturer would have provided access to a maximum fair price for such biological product but for subparagraph (A).
(iii) Second 1-year delay
(C) If not licensed and marketed during the year two delayIf, during the time period between the selected drug publication date of the list for which the biological product would have been included as a selected drug but for subparagraph (B)(iii) and the selected drug publication date with respect to the initial price applicability year that is 2 years after the initial price applicability year for which such biological product would have been included as a selected drug on such list but for this subsection, the Secretary determines that such biosimilar biological product has not been licensed and marketed—
(i) the Secretary shall include such biological product as a selected drug on such list with respect to the initial price applicability year that is 2 years after the initial price applicability year for which such biological product would have been included as a selected drug on such list; and
(ii) the manufacturer of such biological product shall pay a rebate under paragraph (4) with respect to the years for which such manufacturer would have provided access to a maximum fair price for such biological product but for this subsection.
(D) Limitations on delays
(i) Limited to 2 years
(ii) Exclusion of biological products that transitioned to a long-monopoly drug during the delay
(iii) Exclusion of biological products if more than 1 year since licensure
(iv) Certain manufacturers of biosimilar biological products excludedIn no case shall the Secretary delay the inclusion of a biological product as a selected drug on the list published under subsection (a) if Secretary determined that the manufacturer of the biosimilar biological product described in paragraph (1)(A)—(I) is the same as the manufacturer of the reference product described in such paragraph or is treated as being the same pursuant to paragraph (1)(C); or(II) has, based on information from items described in paragraph (1)(B)(ii)(I)(bb), entered into any agreement described in such paragraph with the manufacturer of the reference product described in paragraph (1)(A) that—(aa) requires or incentivizes the manufacturer of the biosimilar biological product to submit a request described in paragraph (1)(B); or(bb) restricts the quantity (either directly or indirectly) of the biosimilar biological product that may be sold in the United States over a specified period of time.
(3) High likelihoodFor purposes of this subsection, there is a high likelihood described in paragraph (1) or paragraph (2), as applicable, if the Secretary finds that—
(A) an application for licensure under section 262(k) of this title for the biosimilar biological product has been accepted for review or approved by the Food and Drug Administration; and
(B) information from items described in sub clauses 2
2 So in original.
(I)(bb) and (III) of paragraph (1)(B)(ii) submitted to the Secretary by the manufacturer requesting a delay under such paragraph provides clear and convincing evidence that such biosimilar biological product will, within the time period specified under paragraph (1)(A) or (2)(B)(i)(I), be marketed.(4) Rebate
(A) In general
(B) AmountSubject to subparagraph (C), the amount of the rebate under subparagraph (A) with respect to a biological product shall be equal to the estimated amount—
(i) in the case of a biological product that is a covered part D drug (as defined in section 1395w–102(e) of this title), that is the sum of the products of—(I) 75 percent of the amount by which—(aa) the average manufacturer price, as reported by the manufacturer of such covered part D drug under section 1396r–8 of this title (or, if not reported by such manufacturer under section 1396r–8 of this title, as reported by such manufacturer to the Secretary pursuant to the agreement under section 1320f–2(a) of this title) for such biological product, with respect to each of the calendar quarters of the price applicability period that would have applied but for this subsection; exceeds(bb) in the initial price applicability year that would have applied but for a delay under—(AA) paragraph (2)(A), the maximum fair price negotiated under section 1320f–3 of this title for such biological product under such agreement; or(BB) paragraph (2)(B)(iii), such maximum fair price, increased as described in section 1320f–4(b)(1)(A) of this title; and(II) the number of units dispensed under part D of subchapter XVIII for such covered part D drug during each such calendar quarter of such price applicability period; and
(ii) in the case of a biological product for which payment may be made under part B of subchapter XVIII, that is the sum of the products of—(I) 80 percent of the amount by which—(aa) the payment amount for such biological product under section 1395w–3a(b) of this title, with respect to each of the calendar quarters of the price applicability period that would have applied but for this subsection; exceeds(bb) in the initial price applicability year that would have applied but for a delay under—(AA) paragraph (2)(A), the maximum fair price negotiated under section 1320f–3 of this title for such biological product under such agreement; or(BB) paragraph (2)(B)(iii), such maximum fair price, increased as described in section 1320f–4(b)(1)(A) of this title; and(II) the number of units (excluding units that are packaged into the payment amount for an item or service and are not separately payable under such part B) of the billing and payment code of such biological product administered or furnished under such part B during each such calendar quarter of such price applicability period.
(C) Special rule for delayed biological products that are long-monopoly drugs
(i) In general
(ii) Amount described
(D) Rebate depositsAmounts paid as rebates under this paragraph shall be deposited into—
(i) in the case payment is made for such biological product under part B of subchapter XVIII, the Federal Supplementary Medical Insurance Trust Fund established under section 1395t of this title; and
(ii) in the case such biological product is a covered part D drug (as defined in section 1395w–102(e) of this title), the Medicare Prescription Drug Account under section 1395w–116 of this title in such Trust Fund.
(5) Definitions of biosimilar biological product
(Aug. 14, 1935, ch. 531, title XI, § 1192, as added and amended Pub. L. 117–169, title I, §§ 11001(a), 11002(a)(1), Aug. 16, 2022, 136 Stat. 1836, 1854.)
§ 1320f–2. Manufacturer agreements
(a) In generalFor purposes of section 1320f(a)(2) of this title, the Secretary shall enter into agreements with manufacturers of selected drugs with respect to a price applicability period, by not later than February 28 following the selected drug publication date with respect to such selected drug, under which—
(1) during the negotiation period for the initial price applicability year for the selected drug, the Secretary and the manufacturer, in accordance with section 1320f–3 of this title, negotiate to determine (and, by not later than the last date of such period, agree to) a maximum fair price for such selected drug of the manufacturer in order for the manufacturer to provide access to such price—
(A) to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1320f(c)(2) of this title and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during, subject to paragraph (2), the price applicability period; and
(B) to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during, subject to paragraph (2), the price applicability period;
(2) the Secretary and the manufacturer shall, in accordance with section 1320f–3 of this title, renegotiate (and, by not later than the last date of the period of renegotiation, agree to) the maximum fair price for such drug, in order for the manufacturer to provide access to such maximum fair price (as so renegotiated)—
(A) to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1320f(c)(2) of this title and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during any year during the price applicability period (beginning after such renegotiation) with respect to such selected drug; and
(B) to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during any year described in subparagraph (A);
(3) subject to subsection (d), access to the maximum fair price (including as renegotiated pursuant to paragraph (2)), with respect to such a selected drug, shall be provided by the manufacturer to—
(A) maximum fair price eligible individuals, who with respect to such drug are described in subparagraph (A) of section 1320f(c)(2) of this title, at the pharmacy, mail order service, or other dispenser at the point-of-sale of such drug (and shall be provided by the manufacturer to the pharmacy, mail order service, or other dispenser, with respect to such maximum fair price eligible individuals who are dispensed such drugs), as described in paragraph (1)(A) or (2)(A), as applicable; and
(B) hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug, as described in paragraph (1)(B) or (2)(B), as applicable;
(4) the manufacturer submits to the Secretary, in a form and manner specified by the Secretary, for the negotiation period for the price applicability period (and, if applicable, before any period of renegotiation pursuant to section 1320f–3(f) of this title), and for section 1320f–1(f) of this title, with respect to such drug—
(A) information on the non-Federal average manufacturer price (as defined in section 8126(h)(5) of title 38) for the drug for the applicable year or period;
(B) information that the Secretary requires to carry out the negotiation (or renegotiation process) under this part; and
(C) information that the Secretary requires to carry out section 1320f–1(f) of this title, including rebates under paragraph (4) of such section; and
(5) the manufacturer complies with requirements determined by the Secretary to be necessary for purposes of administering the program and monitoring compliance with the program.
(b) Agreement in effect until drug is no longer a selected drug
(c) Confidentiality of information
(d) Nonduplication with 340B ceiling priceUnder an agreement entered into under this section, the manufacturer of a selected drug—
(1) shall not be required to provide access to the maximum fair price under subsection (a)(3), with respect to such selected drug and maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at a covered entity described in section 340B(a)(4) of the Public Health Service Act [42 U.S.C. 256b(a)(4)], to such covered entity if such selected drug is subject to an agreement described in section 340B(a)(1) of such Act [42 U.S.C. 256b(a)(1)] and the ceiling price (defined in section 340B(a)(1) of such Act [42 U.S.C. 256b(a)(1)]) is lower than the maximum fair price for such selected drug; and
(2) shall be required to provide access to the maximum fair price to such covered entity with respect to maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at such entity at such ceiling price in a nonduplicated amount to the ceiling price if such maximum fair price is below the ceiling price for such selected drug.
(Aug. 14, 1935, ch. 531, title XI, § 1193, as added and amended Pub. L. 117–169, title I, §§ 11001(a), 11002(a)(2), Aug. 16, 2022, 136 Stat. 1841, 1861.)
§ 1320f–3. Negotiation and renegotiation process
(a) In generalFor 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 processAs 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 requirementsIf 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 amountIn 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) amountAn amount equal to the following:
(i) Covered part D drug
(ii) Part B drug or biological
(C) Subparagraph (C) amountAn 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 yearsIn 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 amountFor 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 describedFor 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) ExclusionsThe 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) FactorsFor 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 dataThe 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 treatmentsThe 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 definedIn 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 drugA 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 drugA 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 renegotiationFor 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.)
§ 1320f–4. Publication of maximum fair prices
(a) In general
With respect to an initial price applicability year and a selected drug with respect to such year—
(1) not later than November 30 of the year that is 2 years prior to such initial price applicability year, the Secretary shall publish the maximum fair price for such drug negotiated with the manufacturer of such drug under this part; and
(2) not later than March 1 of the year prior to such initial price applicability year, the Secretary shall publish, subject to section 1320f–2(c) of this title, the explanation for the maximum fair price with respect to the factors as applied under section 1320f–3(e) of this title for such drug described in paragraph (1).
(b) Updates
(1) Subsequent year maximum fair prices
For a selected drug, for each year subsequent to the first initial price applicability year of the price applicability period with respect to such drug, with respect to which an agreement for such drug is in effect under section 1320f–2 of this title, not later than November 30 of the year that is 2 years prior to such subsequent year, the Secretary shall publish the maximum fair price applicable to such drug and year, which shall be—
(A) subject to subparagraph (B), the amount equal to the maximum fair price published for such drug for the previous year, increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with the July immediately preceding such November 30; or
(B) in the case the maximum fair price for such drug was renegotiated, for the first year for which such price as so renegotiated applies, such renegotiated maximum fair price.
(2) Prices negotiated after deadline
(Aug. 14, 1935, ch. 531, title XI, § 1195, as added Pub. L. 117–169, title I, § 11001(a), Aug. 16, 2022, 136 Stat. 1849.)
§ 1320f–5. Administrative duties and compliance monitoring
(a) Administrative dutiesFor purposes of section 1320f(a)(4) of this title, the administrative duties described in this section are the following:
(1) The establishment of procedures to ensure that the maximum fair price for a selected drug is applied before—
(A) any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of maximum fair price eligible individuals; and
(B) any other discounts.
(2) The establishment of procedures to compute and apply the maximum fair price across different strengths and dosage forms of a selected drug and not based on the specific formulation or package size or package type of such drug.
(3) The establishment of procedures to carry out the provisions of this part, as applicable, with respect to—
(A) maximum fair price eligible individuals who are enrolled in a prescription drug plan under part D of subchapter XVIII or an MA–PD plan under part C of such subchapter; and
(B) maximum fair price eligible individuals who are enrolled under part B of such subchapter, including who are enrolled in an MA plan under part C of such subchapter.
(4) The establishment of a negotiation process and renegotiation process in accordance with section 1320f–3 of this title.
(5) The establishment of a process for manufacturers to submit information described in section 1320f–3(b)(2)(A) of this title.
(6) The sharing with the Secretary of the Treasury of such information as is necessary to determine the tax imposed by section 5000D of the Internal Revenue Code of 1986, including the application of such tax to a manufacturer, producer, or importer or the determination of any date described in section 5000D(c)(1) of such Code. For purposes of the preceding sentence, such information shall include—
(A) the date on which the Secretary receives notification of any termination of an agreement under the Medicare coverage gap discount program under section 1395w–114a of this title and the date on which any subsequent agreement under such program is entered into;
(B) the date on which the Secretary receives notification of any termination of an agreement under the manufacturer discount program under section 1395w–114c of this title and the date on which any subsequent agreement under such program is entered into; and
(C) the date on which the Secretary receives notification of any termination of a rebate agreement described in section 1396r–8(b) of this title and the date on which any subsequent rebate agreement described in such section is entered into.
(7) The establishment of procedures for purposes of applying subsections (d)(2)(B) and (f)(1)(C) of section 1320f–1 of this title.
(b) Compliance monitoring
(Aug. 14, 1935, ch. 531, title XI, § 1196, as added and amended Pub. L. 117–169, title I, §§ 11001(a), 11002(a)(3), Aug. 16, 2022, 136 Stat. 1849, 1861.)
§ 1320f–6. Civil monetary penalties
(a) Violations relating to offering of maximum fair price
Any manufacturer of a selected drug that has entered into an agreement under section 1320f–2 of this title, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year—
(1) to a maximum fair price eligible individual who with respect to such drug is described in subparagraph (A) of section 1320f(c)(2) of this title and who is dispensed such drug during such year (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs); or
(2) to a hospital, physician, or other provider of services or supplier with respect to maximum fair price eligible individuals who with respect to such drug is described in subparagraph (B) of such section and is furnished or administered such drug by such hospital, physician, or provider or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the amount equal to the product of the number of units of such drug so furnished, dispensed, or administered during such year and the difference between the price for such drug made available for such year by such manufacturer with respect to such individual or hospital, physician, provider of services, or supplier and the maximum fair price for such drug for such year.
(b) Violations relating to providing rebates
(c) Violations of certain terms of agreement
(d) False information
(e) Application
(Aug. 14, 1935, ch. 531, title XI, § 1197, as added and amended Pub. L. 117–169, title I, §§ 11001(a), 11002(a)(4), Aug. 16, 2022, 136 Stat. 1850, 1861.)
§ 1320f–7. Limitation on administrative and judicial review
There shall be no administrative or judicial review of any of the following:
(1) The determination of a unit, with respect to a drug or biological product, pursuant to section 1320f(c)(6) of this title.
(2) The selection of drugs under section 1320f–1(b) of this title, the determination of negotiation-eligible drugs under
(3) The determination of a maximum fair price under subsection (b) or (f) of section 1320f–3 of this title.
(4) The determination of renegotiation-eligible drugs under section 1320f–3(f)(2) of this title and the selection of renegotiation-eligible drugs under section 1320f–3(f)(3) of this title.
(Aug. 14, 1935, ch. 531, title XI, § 1198, as added and amended Pub. L. 117–169, title I, §§ 11001(a), 11002(a)(5), Aug. 16, 2022, 136 Stat. 1851, 1861.)