[Federal Register Volume 83, Number 57 (Friday, March 23, 2018)]
[Notices]
[Pages 12770-12799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05947]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-2397-FN]
RIN-0938-ZB29
Medicaid Program; Announcement of Medicaid Drug Rebate Program
National Rebate Agreement
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final notice.
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SUMMARY: This final notice announces changes to the Medicaid National
Drug Rebate Agreement (NDRA, or Agreement) for use by the Secretary of
the Department of Health and Human Services (HHS) and manufacturers
under the Medicaid Drug Rebate Program (MDRP). We are updating the NDRA
to incorporate legislative and regulatory changes that have occurred
since the Agreement was published in the February 21, 1991 Federal
Register (56 FR 7049). We are also updating the NDRA to make editorial
and structural revisions, such as references to the updated Office of
Management and Budget (OMB)-approved data collection forms and
electronic data reporting.
DATES:
Applicability Date: The updated National Medicaid Drug Rebate
Agreement (NDRA) provided in the Addendum to this final notice will be
applicable on March 23, 2018.
Compliance Date: Publication of CMS-2397-FN serves as written
notice of good cause to terminate all existing rebate agreements as of
the first day of the full calendar quarter which begins at least 6
months after the effective date of the updated NDRA (October 1, 2018).
Manufacturers with an existing active
[[Page 12771]]
NDRA will have at least 2 full calendar quarters as of the effective
date of this notice to sign and submit the updated NDRA. We will
publish further guidance on this soon.
FOR FURTHER INFORMATION CONTACT: Terry Simananda, (410) 786-8144.
SUPPLEMENTARY INFORMATION:
I. Background
Under the Medicaid Program, states may provide coverage of
outpatient drugs as part of the medical assistance furnished to
eligible individuals as an optional benefit as described in sections
1902(a)(10) and (a)(54) and 1905(a)(12) of the Social Security Act (the
Act). Section 1903(a) of the Act provides for federal financial
participation (FFP) in state expenditures for these drugs. In general,
for payment to be made available under section 1903 of the Act for most
drugs, manufacturers must enter into, and have in effect, a Medicaid
National Drug Rebate Agreement (NDRA, or Agreement) with the Secretary
of the Department of Health and Human Services (HHS) as set forth in
section 1927(a) of the Act. Additionally, in order to meet the
requirement for a rebate agreement in section 1927(a) of the Act,
manufacturers must also meet the requirements of section 1927(a)(5) of
the Act, which require a manufacturer to enter into an agreement that
meets the requirements of section 340B of the Public Health Service
Act, as well as section 1927(a)(6) of the Act, which requires a
manufacturer to enter into a master agreement with the Secretary of
Veterans Affairs in compliance with 38 U.S.C. 8126 (see section
1927(a)(1) of the Act).
Authorized under section 1927 of the Act, the Medicaid Drug Rebate
Program (MDRP) is a program that includes CMS, state Medicaid Agencies,
and participating drug manufacturers that helps to partially offset the
federal and state costs of most outpatient prescriptions drugs
dispensed to Medicaid beneficiaries. Currently there are more than 650
drug manufacturers who participate in the MDRP. The NDRA provides that
manufacturers are responsible for notifying states of a new drug's
coverage. Manufacturers are required to report all covered outpatient
drugs under their labeler code(s) to the MDRP and may not be selective
in reporting their national drug codes (NDCs) to the program.
Manufacturers are then responsible for paying a rebate on those drugs
that were dispensed and/or paid for, as applicable, under the state
plan. These rebates are paid by manufacturers on a quarterly basis to
states and are shared between the states and the federal government to
partially offset the overall cost of prescription drugs under the
Medicaid Program.
Similarly, manufacturers that wish to terminate an NDRA that have
active covered outpatient drugs must request termination for all
associated labeler codes, and provide a reason for the request (for
example, all covered outpatient drugs under the labeler code are
terminated), or if the request for termination is only for certain
labeler codes, provide justification for such request. Additionally, as
with the current policy, for purposes of ensuring beneficiary access to
single source drugs and/or drugs that are not otherwise available in
the MDRP, we may choose to grant an exception to issuing or reinstating
an NDRA for certain labeler codes of a manufacturer prior to issuing an
NDRA for all of the labeler codes under the manufacturer, or
terminating certain labeler codes as mentioned above.
II. Summary of Proposed Provisions and Analysis of and Responses to
Public Comments on the Proposed Notice
In the proposed notice, published in the November 9, 2016 Federal
Register (81 FR 78816), we provided a draft agreement updating the NDRA
to reflect the changes in the Covered Outpatient Drug final rule with
comment period that was published in the February 1, 2016 Federal
Register (81 FR 5170), as well as operational and other legislative
changes that have occurred over the last 20 plus years since the NDRA
was first issued in 1991. We indicated in the proposed notice that a
sample of the finalized NDRA would be posted on the CMS website after
we considered the public comments and published the final notice.
In the proposed notice, we included in the Addendum, a draft of the
updated NDRA for use in the MDRP, upon which we requested public
comment. In the proposed notice, we indicated that if adopted, a drug
manufacturer that seeks Medicaid coverage for its drugs would need to
enter into the NDRA with the Secretary agreeing to provide the
applicable rebate on those drugs for which payment was made under the
state plan. The NDRA is not a contract. Rather, it should be viewed as
an opt-in agreement that memorializes the statute and regulations.
Therefore, we noted our intention to use the updated NDRA as a standard
agreement that will not be subject to further revisions based on
negotiations with individual manufacturers. For a complete and full
description of the draft agreement of the NDRA, see the ``Addendum--
Draft Agreement: National Drug Rebate Agreement Between the Secretary
of Health and Human Services (Hereinafter referred to as ``the
Secretary'') and the Manufacturer'' published in the proposed notice in
the November 9, 2016 Federal Register (81 FR 78818 through 78835).
In response to the publication of the November 9, 2016 proposed
notice, we received 13 timely public comments, some of which are beyond
the scope of our proposals in that notice and will not be summarized
and included in our responses below. Revisions made to the NDRA in
response specific comments are noted in the applicable response to
comments. Additionally, edits have been made to provide further clarity
to the NDRA. A summary of revisions and edits made to the NDRA are
provided as a summary to each section below. The following are a
summary of the relevant public comments that we received related to the
proposed notice, and our responses to the public comments.
A. Section I. Definitions
1. General Comments
Comment: One commenter is concerned that it may be overly
cumbersome to require the user of the Agreement to look up the
referenced regulations to determine the definitions of the terminology
used in the Agreement. The commenter suggested that CMS update the text
of the definitions and reference existing statute and regulations,
rather than just putting forward the latter. In particular, the
commenter noted that its recommendation would be most usefully applied
to the definitions of the following terms: ``average manufacturer price
(AMP),'' ``best price,'' ``covered outpatient drug,'' ``monthly AMP,''
``quarterly AMP,'' and ``rebate period.''
Response: We disagree with the commenter that the text of the
definitions, and references to the relevant statutory and/or regulatory
citations, be included in the definitions. We prefer to refer to
statute and/or regulations, as well as agency guidance, as opposed to
repeating such language in the NDRA, as we believe this decreases the
chance of inaccurate or conflicting NDRA text. Additionally, although
the updated NDRA cites definitions implemented most recently in the
Covered Outpatient Drug final rule with comment period (Final Rule)
published in the Federal Register on February 1, 2016 (81 FR 5170), and
codified in 42 CFR part 447, subpart I, we believe that subsequent
statutory and/or regulatory changes are
[[Page 12772]]
incorporated by section VIII.(a). of the Agreement, which provides that
the Agreement is subject to any changes in the Medicaid statute or
regulations that affect the rebate program.
Restore Depot Price and Single Award Contract Price Definitions
Comment: A few commenters recommended that CMS not delete the
definitions of ``Depot Price'' and ``Single-Award Contract Price'' from
the Agreement as these terms are used but not defined in the MDRP
statute and regulations. Specifically, the commenters stated that the
MDRP statute defines best price to exclude ``Depot Price'' and
``Single-Award Contract Price.'' These same terms are used in the
regulatory definitions of best price and AMP, however they are not
defined anywhere except in the current NDRA. Therefore, the commenters
recommended that CMS maintain the current definition of ``Depot Price''
and ``Single-Award Contract Price'' in the NDRA.
Response: We agree with the commenter that the definitions of
``Depot Price'' and ``Single-Award Contract Price'' should be retained
in the NDRA as they are used in determination of best price and AMP but
are not defined anywhere except for the NDRA. In addition, since we are
retaining the definition of ``Single-Award Contract Price'', we will
also retain the definition of ``Single-Award Contract.'' These
definitions are being retained without any revisions. The definitions
read as follows:
``Depot Price'' means the price(s) available to any depot
of the federal government, for purchase of drugs from the Manufacturer
through the depot system of procurement.
``Single-Award Contract'' means a contract between the
federal government and a Manufacturer resulting in a single supplier
for a Covered Outpatient Drug within a class of drugs. The Federal
Supply Schedule is not included in this definition as a single award
contract.
``Single-Award Contract Price'' means a price established
under a Single-Award Contract.
2. Marketed
Comment: One commenter recommended that CMS retain the original
NDRA definition of ``marketed'' so that the base date AMP ties to a
sales transaction from which pricing data can be captured. The
commenter noted the phrase ``first available for sale'' could be
interpreted in a number of ways, including the date the drug receives
Food and Drug Administration (FDA) approval, or when finished goods are
ready to ship. Furthermore, the commenter stated that a first sale
transaction might not occur for some time after those dates.
Response: While the commenter used the phrase ``first available for
sale'' in its comment, the definition of ``marketed'' in the proposed
notice does not include the word ``first.'' Rather it states that
marketed means that a covered outpatient drug is available for sale by
the manufacturer in the states (81 FR 78818). We believe the use of the
phrase ``available for sale'' in the definition of ``marketed'' is
consistent with past operational guidance issued by us regarding
manufacturer reporting of base date AMP (see Manufacturer Release #69,
in the manufacturer frequently asked questions (FAQs) section where we
provide information in the answer A3 concerning the correct reporting
of Market Date.) Therefore, we are retaining and finalizing this
definition as provided in the proposed notice. Program Releases are
available on www.Medicaid.gov.
3. State Drug Utilization Data
Comment: A few commenters supported the proposed definition of
State Drug Utilization Data because it described the utilization on
which rebates are due, and explicitly specified that the state invoice
data must exclude drugs purchased under the 340B program. However, the
commenters recommended that CMS make the following changes:
Add the phrase ``consistent with the Unit Type reported by
the manufacturer, for the NDC'' to the definition to minimize the
significant volume of Unit of Measure disputes generated by state
submissions of claimed units in forms different from the types reported
by the manufacturers.
Delete the phrase ``state utilization data is supplied on
the CMS-R-144 form (that is, the state rebate invoice)'' because the
format and data provided by the states on CMS-R-144 are not sufficient
for accurate and timely validation of state claimed units submitted for
rebate payments.
Clarify that such data must exclude any Part D drug
utilization by dual eligible individuals, in accordance with section
1935(d)(1) of the Act because some states are reimbursing Part D
copayments for dual eligible individuals and are including these
copayments in state utilization data.
Accordingly, the commenters suggested modifying the definition of
``State Drug Utilization Data'' to read, ``the total number of both
fee-for-service (FFS) and managed care organization (MCO) units of each
dosage form and strength, consistent with the Unit Type reported by the
manufacturer for the NDC, of the manufacturer's covered outpatient
drugs reimbursed during a rebate period under a Medicaid State Plan,
other than units dispensed to Medicaid beneficiaries that were
purchased by covered entities through the drug discount program under
section 340B of the Public Health Service Act and other than units of
Part D drugs dispensed to Medicare and Medicaid dual eligibles.''
Response: We disagree with the commenter that the proposed
definition of ``State Drug Utilization Data'' should be changed to
read, ``consistent with the Unit Type reported by the manufacturer for
the NDC.'' Manufacturers do not always report the correct Unit Type for
an NDC, and the state's drug utilization data reporting may serve to
open the necessary dialogue to make manufacturers aware of the need to
report the correct Unit Type, or to discuss the need for the state or
the manufacturer to perform a conversion prior to rebate billing or
payment.
We further disagree with the commenter's suggestion to delete
reference to the CMS-R-144 because that is the Office of Management and
Budget (OMB)-approved format and fields to be included on the state's
quarterly rebate invoice. The CMS-R-144 is not considered claims-level
data (CLD), the exchange of which is sometimes necessary for rebate
payment validation purposes.
Finally, we disagree that adding a specific Medicare Part D
exclusion is necessary since manufacturers have the right to dispute
claims they believe are ineligible for rebate. If states and
manufacturers cannot resolve disputes on their own, either party may
ask the MDRP Dispute Resolution Program (DRP) team to assist by
contacting the CMS Regional Office (RO) DRP Coordinator (a list of the
RO DRP Coordinators can be found on www.Medicaid.gov).
Comment: One commenter requested that the definition of State Drug
Utilization Data be strengthened to explicitly exclude units dispensed
to Medicaid beneficiaries that were purchased by covered entities
through the 340B program and incorporate specifics into the definition
including timeframe in which data must be provided, with cross
references to later sections of the rebate agreement, and include the
following data elements: Date of service (DOS), prescription number,
and billed amount.
Response: We updated the language in the proposed NDRA to
explicitly
[[Page 12773]]
exclude units dispensed to Medicaid beneficiaries that were purchased
by covered entities through the drug discount program under section
340B of the Public Health Service Act (PHSA). We believe this reference
is sufficient. As this is an agreement between the Secretary and the
manufacturer, not the state, we do not believe it is necessary to
include the statutory timeframe for states to transmit the CMS-R-144,
or rebate invoice. However, section III.(a)., ``Secretary's
Responsibilities'' does include reference to the 60-day timeframe for
state reporting of utilization data. Additionally, DOS, prescription
number, and billed amounts are not required to be reported on the CMS-
R-144; however, manufacturers may request the minimum CLD required to
validate the utilization data received from the state. As discussed in
Manufacturer Release #95 and State Release #173, we continue to
encourage the exchange of the minimum CLD in such situations. Program
Releases are available on www.Medicaid.gov.
Comment: One commenter expressed concern that the exclusion of
340B-purchased drugs from the definition of State Drug Utilization Data
may be misunderstood by 340B covered entities as absolving the covered
entities of their responsibility to avoid duplicate discounts under the
340B program, and instead placing such responsibility exclusively on
state Medicaid agencies. The commenter further recommended that when
updating the definition of State Drug Utilization Data in the
Agreement, CMS should express that the update in no way affects the
covered entities obligation under the 340B program to avoid duplicate
discounts. The commenter further noted that while the administration of
the 340B program is primarily the responsibility of the Health
Resources and Services Administration (HRSA), the commenter asserted
that section 1927(a)(5)(C) of the Act indicates that CMS shares
responsibility for providing guidance to 340B covered entities on how
to avoid duplicate discounts. The commenter requested that CMS take
additional steps to guide 340B covered entities by establishing, in the
Medicaid managed care context, a uniform means for 340B claims to be
identified, as well as establish specific procedures for states,
Medicaid MCOs, and 340B covered entities to follow to ensure that 340B
claims are excluded from the data submitted to manufacturers for
request rebates.
Response: We disagree that we should discuss 340B covered entity
requirements in the NDRA, because those requirements are appropriately
communicated by HRSA, the agency that is responsible for administration
and oversight of the 340B program. We continue to work with HRSA,
manufacturers, states, data vendors, PBMs, and other interested parties
to try to identify and ensure exclusion of 340B FFS and MCO units from
rebate billing.
Comment: One commenter stated that CMS should revise the definition
of State Drug Utilization Data to specifically refer to the statutory
prohibition on duplicate discounts in section 340B(a)(5)(A) of the
PHSA. The commenter further recommended that CMS reference the
duplicate discount prohibition in every instance throughout the revised
NDRA in which it is implicated, emphasizing the need for states to
request rebates only on FFS and MCO covered outpatient drugs that have
not been purchased under the 340B program.
Response: While we appreciate the commenter's concern regarding
duplicate discounts, we do not believe that the NDRA is the appropriate
avenue to remind states of their obligation to exclude both FFS and MCO
340B claims from their manufacturer rebate requests, as the NDRA is an
agreement that applies to manufacturers, not the states. Furthermore,
while we added reference to the specific exclusion of 340B units from
State Drug Utilization Data, we do not believe that it is necessary, as
suggested by the commenter, to add a specific reference to section
340B(a)(5)(A) of the PHSA.
Comment: One commenter recommended that CMS incorporate additional
specifics into the definition of State Drug Utilization Data to guide
its operationalization including both the applicable timeframe in which
the state's drug utilization data must be provided--states are often
able to provide drug utilization data within a 7-calendar day
timeframe--and the following list of minimum claims-level data elements
that should be provided: Provider ID; Provider Name and Address; Date
of Service; Paid Date; Billed Amount; Prescription Number; and National
Drug Code (NDC) 11. Other data elements that the commenter recommended
CMS should include in this minimum set are: Original claim quantity;
conversion factor; invoice quantity; Healthcare Common Procedure Coding
System (HCPCS) code; claim type; days' supply; allowed amount; third-
party amount reimbursed; Dispensed-As-Written (DAW) indicator; and
Medicaid plan name and identification number (BIN/Processor Control
Number). The commenter further recommended that these data be made
available in a standardized, downloadable format, and should be
provided in addition to those indispensable data elements that are
already consistently made available by states.
Response: As this is an agreement between the Secretary and the
manufacturer, and not the state, we do not believe it is necessary nor
appropriate to include the statutory timeframe for states to transmit
the CMS-R-144, or rebate invoice; however, section III.(a).,
``Secretary's Responsibilities'' does include reference to the 60-day
timeframe for state reporting of utilization data. We disagree with the
commenter that there is a minimum set of CLD that should be expected
along with State Drug Utilization Data, as different CLD fields are
needed depending on variables such as provider setting, third-party co-
pays, and the type of dispute or potential dispute. We continue to
encourage states to share the appropriate minimum CLD for payment
validation purposes on a case-by-case basis.
4. Unit
Comment: A few commenters disagreed with our proposed change to the
definition of ``unit'' from ``drug unit in the lowest identifiable
amount'' to ``drug unit in the lowest dispensable amount'' and the
removal of the examples in the current definition (for example, tablet,
capsule, milliliter, and gram). The commenters stated that the change
to ``lowest dispensable amount'' does not define nor clearly address
the two product unit data elements reported by manufacturers to CMS and
is not consistent with current CMS guidance, including Drug Data
Reporting for Medicaid (DDR) system Data Guides, where CMS provides
that manufacturers use eight unit types: Injectable anti-hemophilic
factor; capsule; each; gram; milliliter; suppository; tablet; and
transdermal patch. The commenters suggest renaming ``unit'' to ``unit
type'' and adding the specific eight reporting types for consistency
with CMS manufacturer product reporting requirements. Specifically, one
commenter suggested that ``Unit Type'' means ``one of the eight
possible unit types by which the covered outpatient drug, form, and
strength will be dispensed, as reported by the manufacturer consistent
with the product reporting instructions from CMS (CMS 367-c). The eight
possible unit types are injectable anti-hemophilic factor, capsule,
each, gram, milliliter, suppository, tablet, and transdermal patch.''
[[Page 12774]]
The commenter indicated that if CMS does not accept the suggested
changes, then CMS should explain the purpose of the change and whether
it implies any change in the unit types reported by manufacturers
because the ``unit type'' selected by the manufacturer is the basis for
the pricing metrics data and unit rebate amount (URA) calculation.
Response: While we appreciate the comments, we have decided to
retain the changes to the definition of ``Unit,'' set forth in the
proposed notice as we believe this is more accurate and descriptive of
what states receive on their claim than ``lowest identifiable amount.''
We are not including any of the eight specific unit types that are
currently used, as those are subject to being updated by operational
instruction, including DDR system Data Guides. Our intent is to update
the NDRA as appropriate and ensure that we are able to keep pace with
the changes in drug delivery processes and manufacturer and drug
innovation. We seek to ensure that manufacturers that need a change in
unit types based on future products are able to participate in the MDRP
and to report their prices accurately in conjunction with necessary
unit types, and that our beneficiaries have access to such drugs.
``Unit'' is meant to identify the lowest dispensable ``Units Per
Package Size'' field of the ``Unit Type'' reported on the CMS-367. This
is meant to better clarify the manufacturer's drug product reporting
requirements.
5. Unit Rebate Amount (URA)
Comment: One commenter agreed with the proposed definition of
``Unit Rebate Amount'' as ``the computed amount to which the state drug
utilization data is applied by states in invoicing the manufacturer for
the rebate payment due,'' but recommended that CMS include additional
text indicating CMS's longstanding position that manufacturers remain
solely responsible for calculating the URA that is necessary to pay a
rebate. Similarly, another commenter suggested that CMS clarify in the
definition of ``Unit Rebate Amount'' that this is the amount computed
``by CMS'' to which the State Drug Utilization Data is applied by
states and that CMS provide this URA information to states as a
courtesy and drug manufacturers remain responsible for correctly
calculating the URA for their covered outpatient drugs. The commenter
stated this is important because manufacturers face Civil Monetary
Penalties and potential False Claims Act liability for any late or
misreported prices, and that there are adequate safeguards in place to
ensure manufacturer compliance.
Response: We do not believe it is necessary to add language to the
definition of ``Unit Rebate Amount'' to specify the manufacturer's
responsibility to calculate a URA for each covered outpatient drug for
which a state made a payment, or was dispensed, in a rebate period.
However, we agree that the manufacturer's responsibility to calculate a
URA should be strengthened, and this is carried out in section II,
``Manufacturer's Responsibilities.'' Therefore, in this updated NDRA,
we are revising section II.(b)., by changing the last sentence of the
proposed paragraph to state that ``[f]urthermore, except as provided
under section V.(b). of this agreement, manufacturers are required to
calculate a URA and make a rebate payment in accordance with each
calculated URA to each State Medicaid Agency for the manufacturer's
covered outpatient drug(s) by NDC paid for by the state during a rebate
period.'' Additionally, we have added the following sentence to the end
of the paragraph to further clarify our calculation of the URA: ``CMS
may calculate a URA based on manufacturer-submitted product and pricing
data and provide the URA to states in order to facilitate rebate
billing. However, CMS's URA calculation does not relieve the
manufacturer of its responsibility to calculate the URA.''
B. Section II. Manufacturer's Responsibilities
1. Point of Contact
Comment: Several commenters suggested allowing manufacturers the
flexibility to identify more than one contact related to rebate invoice
issues. Another commenter recommended that CMS clarify that the
reference to a single point of contact refers only to a contact for
rebate invoice issues. The commenters suggested that CMS develop more
flexible language to allow manufacturers to identify more than one
point of contact or permit a general mailbox for communications.
Another commenter indicated that CMS should consider establishing both
primary and secondary points of contact to ensure consistency of
communication between the state and manufacturers in the event the
designated contact becomes unavailable. The commenters stated such
flexibility would facilitate communication between states and
manufacturers while allowing for differences in business models and
accommodating the reality of turn-over and employee absences or non-
availability.
Response: The CMS-367(d) allows the manufacturer to identify one
main contact for each of the following issues: Legal, Invoice, and
Technical, and the NDRA has been updated at section II.(a). to specify
the three contacts required on the CMS-367(d). Therefore, section
II.(a). will now specifically state that ``[t]he manufacturer shall
identify an individual point of contact for the Legal, Invoice, and
Technical contacts at a United States address to facilitate the
necessary communications with states with respect to rebate invoice
issues.''
The requirement of the three official manufacturer contacts is to
ensure accountability and to facilitate communications between CMS, the
states, and manufacturers regarding all aspects of the MDRP.
Manufacturers and states often exchange additional contacts with each
other; however, for purposes of the MDRP, only one official contact
will be submitted for each of the manufacturer's roles. In an effort to
ensure there are no delays regarding invoice processing and rebate
payments, we allow a general email address to be listed for the invoice
contact, but requires that a direct contact name and telephone number
be submitted on the CMS-367(d) for the official contact. The official
Legal and Technical Contacts are required to list their direct email
address and telephone numbers. Although it is the manufacturer's
responsibility to ensure that their official contacts on file with CMS
are updated at all times, many manufacturers do not update the official
contacts on file in a timely manner. It is especially important for
manufacturers to notify CMS of Technical Contact changes since the
CMS's MDRP staff includes the manufacturer's Technical Contact on all
communications with the manufacturer to ensure that the manufacturer's
Technical Contact is aware of what is being requested by others with
respect to its data.
2. Manufacturer Price Reporting and Rebate Payments
Comment: A few commenters recommended that CMS clarify that a
rebate payment under the NDRA is only due on covered outpatient drugs
paid for by the state ``under a Medicaid State Plan or approved waiver
program'' or ``under Medicaid'' since some states have multiple, non-
Medicaid programs under which they pay for covered outpatient drugs.
Response: We agree with the commenter that rebates negotiated as
part of a state-only pharmacy program are not subject to the rebate
provisions. We believe that the introductory
[[Page 12775]]
language of section II., ``Manufacturer's Responsibilities,'' offers
these assurances where it provides that ``[i]n order for the Secretary
to authorize that a state receive payment for the manufacturer's drugs
under Title XIX of the Act, 42 U.S.C. Section 1396 et seq., the
manufacturer agrees to the requirements as implemented by 42 CFR
447.510. . .'' Therefore, if a manufacturer receives a request for
payment under this agreement that it does not believe is billed under
federal Medicaid, we recommend the manufacturer contact the state for
clarification.
3. Reporting Inner and Outer NDCs
Comment: A few commenters did not support the additional language
that manufacturer drug product pricing reports must ``include all
applicable NDCs identifying the drug product which may be dispensed to
a beneficiary, including package NDCs (outer package NDCs and inner
package NDCs).'' One commenter indicated that sales are based upon the
outer NDC, therefore, CMS should remove the language indicating
manufacturers have to report information on both inner and outer
package NDCs. Another commenter disagreed with using the undefined and
often misconstrued terms for describing product NDC-11s as ``outer
package'' and ``inner package'' because reporting extraneous
information increases the risk of potential error.
In particular, the commenter recommended that we delete the last
sentence in section II.(c). which states, ``Reports to CMS should
include all applicable NDCs identifying the drug product which may be
dispensed to a beneficiary, including package NDCs (outer package NDCs
and inner package NDCs)'' and replace it with the following,
``Manufacturer product data reporting to CMS should include all
applicable NDCs identifying the drug product, as available for product
sales in the states and as listed on the product label, which may be
dispensed to a beneficiary.''
Response: We disagree with the comments summarized above in which
commenters do not support the addition of the language in II.(c).
regarding the inclusion of inner and outer NDCs for package NDCs be
reported to us. We issued agency guidance clarifying the requirement
for reporting of inner and outer NDCs in Manufacturer Release #106 and
State Release #183. Manufacturer sales of NDCs do not determine whether
the NDC is reported to us, or the NDC's status as a covered outpatient
drug. As we indicated in the above releases, in accordance with section
1927(b)(3)(A) of the Act, manufacturers that have signed a rebate
agreement are required to report certain pricing information for all
covered outpatient drugs. As was stated in the aforementioned guidance,
manufacturers must report all of their NDCs that meet the definition of
a covered outpatient drug as described in statute at sections
1927(k)(2) through 1927(k)(4) of the Act, and regulation at Sec.
447.502, to ensure compliance with the applicable reporting and payment
requirements.
Also, in accordance with section 1927(b)(1)(A) of the Act, such
manufacturers are required to make rebate payments for covered
outpatient drugs dispensed after December 31, 1990, for which payment
was made under the state plan for such a period. This includes drugs
dispensed to Medicaid MCO enrollees. Additionally, per 1927(b)(2)(A) of
the Act, states are required to report to manufacturers at the end of
each rebate period, information on the total number of units of each
dosage form and strength and package size of each covered outpatient
drug dispensed after December 31, 1990, for which payment was made or
which was dispensed under the plan, including information reported by
each Medicaid managed care organization. Therefore, if a state has
reimbursed a provider for FFS claims for an inner NDC, or if an inner
NDC was dispensed for an MCO claim, the state is required to report or
invoice the inner NDC to the manufacturer, and the manufacturer is
subsequently required to pay rebates in accordance with section
1927(b)(1)(A) of the Act.
We further disagree that describing an NDC as an inner or outer NDC
could be misconstrued, or that reporting information on both inner and
outer NDCs is extraneous and could lead to potential errors. As noted
above, we believe both NDCs may be evaluated as covered outpatient
drugs, and if an NDC is a covered outpatient drug, then it should be
reported as our guidance further clarifies. In other words, when states
receive a claim from and pay a provider for dispensing an inner NDC,
the state is required to invoice the manufacturer for that NDC and the
manufacturer is subsequently required to pay rebates in accordance with
1927(b)(1)(A) of the Act. Program Releases are available on
www.Medicaid.gov.
Comment: One commenter requested that CMS clarify the purpose of
the following text, proposed for addition in section II.(c). to read,
``CMS uses drug information listed with FDA, such as Marketing Category
and Drug Type, to be able to verify in some cases that an NDC meets the
definition of a covered outpatient drug . . . [.]'' The commenter
stated that this statement may be unnecessary and could lead to
confusion if not omitted from the updated NDRA revision. In the absence
of such a clarification, the commenter recommended CMS delete this
clause.
Also with regard to section II.(c)., the commenter requested that
CMS clarify whether the ``reports'' referenced in the text--that is,
``[r]eports to CMS should include all applicable NDCs identifying the
drug product . . .''--are meant to be distinct from reports adding
product information into the DDR system. The commenter noted this
clarification is necessary given that, currently, products must be
listed with the FDA before being added to the DDR system.
Response: We have decided to remove the phrase ``in some cases''
from the sentence regarding use of FDA information so that the
provision now reads, ``CMS uses drug information listed with FDA, such
as Marketing Category and Drug Type, to be able to verify that an NDC
meets the definition of a covered outpatient drug . . . [.]'' We
believe that the use of the phrase ``in some cases'' is neither
necessary nor consistent with the discussion surrounding covered
outpatient drugs in the final rule (81 FR 5184). We believe that when
the entire sentence is considered (that is, ``CMS uses drug information
listed with FDA, such as Marketing Category and Drug Type, to be able
to verify that an NDC meets the definition of a covered outpatient
drug, therefore, manufacturers should ensure that their NDCs are
electronically listed with FDA.''), it is clear to manufacturers how we
use drug information listed with FDA, and why it is in a manufacturer's
best interests to ensure that their NDCs are electronically listed with
FDA. Manufacturers should ensure that their NDCs are electronically
listed with FDA for us to have access to information to be able to
verify that an NDC meets the definition of a covered outpatient drug.
As for the commenter's request for clarification on the ``reports
to CMS'' reference, this text is meant to instruct manufacturers to
report all NDCs to CMS that may be dispensed to a beneficiary. This
includes, but is not limited to NDCs on inner components within a
larger container, if that NDC on the inner component represents a drug
that meets the definition of a covered outpatient drug. NDCs must be
listed with FDA in order for a manufacturer to be able to certify the
product data in DDR. Manufacturers may contact
[[Page 12776]]
[email protected] if they encounter difficulty with this
requirement.
4. Quarterly Pricing Adjustment Reporting
Comment: Several commenters stated that the proposed language in
section II.(d). could be read to require that manufacturers restate
their AMP, best price, customary prompt pay discount data, and nominal
price data within 30 days of the end of each quarter in which any
adjustment can be made in the last-reported figures. The commenters
recommended that CMS not finalize this provision because a requirement
to make restatements each quarter whenever an adjustment can be made
conflicts with the current regulations at 42 CFR 447.510(b) which
provide that ``a manufacturer must report to CMS any revision to AMP,
best price, customary prompt discounts, or nominal prices for a period
not to exceed 12 quarters from the quarter in which the data were due.
Any revision request that exceeds 12 quarters will not be considered .
. . A manufacturer must report revised AMP within the 12-quarter time
period, except when the revision would be solely as a result of data
pertaining to lagged price concessions.''
The commenters noted that the regulation does not require that
restatements be filed more than once within that 3-year window--only
that the information must be restated by the end of the window. The
commenters stated that our proposed language could conflict with the
regulations and eliminate the flexibility the regulations provide to
manufacturers regarding the timing of restatements, as it suggests that
manufacturers would be required to make restatements more frequently
than required by the regulations. To ensure that the Agreement aligns
with the regulations, the commenters recommended that CMS not finalize
this proposed change.
Response: We agree with the commenters that this phrase as
originally worded could be misinterpreted. Therefore, we are revising
the last sentence of section II.(d). to state that ``adjustments to all
prior quarterly pricing data must be reported for a period not to
exceed 12 quarters from when the pricing data were originally due as
required under Sec. 447.510(b).''
5. Increases and Decreases of Rebate Payment Amounts
Comment: Several commenters disagreed with our proposal to add the
following sentence to section II.(f).: ``To the extent that changes in
product, pricing, or related data cause increases to previously
submitted total rebate amounts, the manufacturer will be responsible
for timely payment of those increases in the same 30-day time frame as
the current rebate invoice.'' The commenters stated that rebate
payments must be adjusted when information changes causing either
increases or decreases in previously submitted total rebate amounts and
the Agreement must address both scenarios to be consistent with
existing standards and that manufacturers continue to be entitled to
recoup rebate overpayments as well.
Response: The purpose of this addition to section II.(f). is to
state the manufacturers obligations when pricing or product data
changes submitted by the manufacturer cause an increase in the amount
owed to the state from previously paid rebate amounts. Manufacturer
Release #58 provided guidance clarifying that interest applies when
manufacturers fail to pay increases due to Prior Period Adjustments
(PPAs) timely, and this is reflected in the proposed and updated NDRA.
Program Releases are available on www.Medicaid.gov.
When PPAs cause a decrease to the amount of rebates previously paid
by manufacturers, states will issue a credit upon agreement with the
manufacturers about where the manufacturer would like the credit
applied. To facilitate timely credits being applied by states, we
encourage manufacturers to communicate which NDC line item(s) the
credit(s) should be applied to with states. In response to public
comment, and consistent with existing guidance, we have revised the
updated NDRA at section II.(f). to add: ``To the extent that changes in
product, pricing, or related data cause decreases to previously
submitted total rebate amounts, the manufacturer should communicate
with the states regarding where to apply the line-item (NDC-level)
credit.'' to the end of the paragraph. Furthermore, we continue to
encourage manufacturers and states to work together to ensure that
appropriate payments are made, and credits applied, timely.
Comment: One commenter requested that CMS explain what changes
cause decreases to previously submitted total rebate amounts.
Response: As previously stated, when PPAs cause a decrease to the
amount of rebates previously paid by manufacturers, states will issue a
credit upon agreement with the manufacturers about where the
manufacturer would like the credit applied. We continue to encourage
manufacturers and states to work together to ensure that appropriate
payments are made, and credits applied, timely.
Comment: A few commenters urged CMS to clarify that the 30-day
rebate does not conflict with the existing guidance provided under the
Medicaid Rebate Data Guide for Labelers (April 2016), which provides
that timely rebate payments must be made within 37 calendar days from
the date a state receives the adjustment from CMS on the current
quarterly URA data file. CMS should clarify that the existing policy
permitting manufacturers to make rebate payments within 37 calendar
days from the rebate invoice postmark date remain intact. Any confusion
to the timeline for rebate payment could have a significant, negative
operational impact on manufacturers and create additional
administrative burden for manufactures, states, and CMS.
The commenters further noted that CMS recently reminded
manufacturers of this ``38th day rule'' in a March 10, 2014 Program
Notice, which stated that: ``[f]or purposes of calculating interest on
late rebate payments, previously issued guidance (for example,
Manufacturer Release #7 and State Release #29) has noted that
manufacturers have 37 calendar days (as evidenced by the postmark by
the U.S. Postal Service on the envelope) to pay rebates before interest
begins to accrue.''
The commenters recommended that the updated NDRA include a new
subsection (g) to follow the revised subsection (f) in which the 30-day
payment requirement is stated (all other subsections re-lettered
accordingly) to read, ``(g) For purposes of calculating interest on
late rebate payments, manufacturers have 37 calendar days to pay
rebates before interest begins to accrue. Based upon the state's
invoice transmission method, manufacturers should use the state's email
notification date, or the postmark by the U.S. Postal Service on the
envelope.''
Response: While we appreciate the comment, we do not believe that
the NDRA is the appropriate vehicle to relay such operational guidance.
However, we are clarifying that the statutory requirements have not
changed, nor has the language from the current rebate agreement, with
respect to the rebate payment being made by the manufacturer in the
proposed NDRA. The operational guidance relating to interest
application after the 37th day from the postmark date of the invoice
can be found in various Program Releases, including State Releases #29,
and #166, as well as Manufacturer Release #7. Program Releases are
available on www.Medicaid.gov.
[[Page 12777]]
Comment: One commenter requested revisions to section II.(f). to
identify the parties' respective responsibility in the event that
changes in product, pricing, or related data cause decreases to
previously submitted total rebate amounts, and any credits to the
manufacturer that may occur as a result of such decreases. The
commenter noted CMS should clearly establish a single process and
timeline for resolving changes in data regardless of whether they
result in decreases or increases in the submitted total rebate amounts.
Response: As stated in previous responses to comments on decreases
in rebate liability necessitated by manufacturer changes to pricing
and/or product data, manufacturers are responsible for informing states
to which line-item credits are to be applied. State responsibility is
not included in the NDRA as the agreement is between the manufacturer
and the Secretary and is not the appropriate vehicle for such guidance.
6. Comply With Statute, Regulation, Agency Guidance and Rebate
Agreement
Comment: Several commenters noted that CMS should not include
``agency guidance'' among the items listed in section II.(g). as such a
provision would circumvent the Administrative Procedures Act (APA),
exceed the Secretary's authority under the Medicaid statute, be
inconsistent with fundamental principles of contract law, fundamentally
unfair, and over broad. The commenters further noted that under the
APA, subregulatory guidance does not have the force of law and is not
binding. Furthermore, commenters have indicated that the Medicaid
rebate statute does not authorize CMS to override the APA, which serves
to ensure that binding law is issued through a careful, deliberative
process with stakeholder input.
Response: We do not believe that including a reference to agency
guidance in this provision implicates the APA. Agency guidance is a
reference to the interpretive guidance published by the agency,
interpreting the Medicaid Drug Rebate statute and implementing
regulations. Including a reference to ``agency guidance'' in this
provision in the Agreement is simply a term of the Agreement, and does
not suggest that agency guidance carries the force of law, as statutes
and regulations do so. Therefore, we have retained ``agency guidance''
in section II.(g). of the rebate agreement.
Comment: A few commenters did not agree with our deletion of the
requirement that CMS provide ``actual prior notice to the
manufacturer'' before the manufacturer has to meet any change in its
compliance obligations. The commenters were concerned that the lack of
notice only exacerbates the concern over the addition of ``agency
guidance'' to this provision in section II.(g). of the NDRA and as a
result, even when manufacturers regularly check on their compliance
obligations, they may not succeed in complying with all changes to
agency guidance obligated to do under the updated NDRA. The commenters
requested that CMS finalize the NDRA with such a notice requirement
restored.
Response: We disagree with the commenters that this language
remains necessary in the NDRA, as the laws and recently implemented
final regulations provide the legal framework for the program.
Furthermore, as stated previously, agency guidance is a reference to
the interpretive guidance published by the agency, interpreting the
Medicaid Drug Rebate statute and implementing regulations. Including a
reference to ``agency guidance'' in this provision in the Agreement is
simply a term of the Agreement, and does not suggest that agency
guidance carries the force of law, as statutes and regulations do.
C. Section III. Secretary's Responsibilities
1. States' Reporting of Drug Utilization Information
Comment: Several commenters were concerned that the language CMS
proposed in section III.(a). appears to weaken states' reporting
requirements, could impact the reporting of state drug utilization data
and conflicts with the Medicaid statute. While commenters acknowledged
that CMS are the party to the NDRA, not states, and therefore could not
bind states via the NDRA, they asserted that CMS must maintain
consistency between the NDRA and the statute, which is binding on the
states. Therefore, the commenters noted that CMS should incorporate
state obligations by reference or specifically quote section
1927(b)(2)(A) of the Act instead of adopting language that differs
substantively from the statute.
The commenters further noted that CMS should use the term
``shall,'' since it is consistent with the statutory requirement,
rather than the draft revised NDRA's more permissive ``employ best
efforts'' language. The commenters believe the revised text ``employ
best efforts'' is open for broad interpretation, and as such lends
significant uncertainty to the exact CMS activities that will be
undertaken to ensure state compliance with rebate invoice reporting
requirements. The commenters noted that CMS should strengthen the
language to reflect our responsibility to ensure state's compliance
with the applicable statutory provisions. However, if CMS continue to
use the language ``employ best efforts'' in the updated NDRA, the
commenters urged CMS to issue draft guidance simultaneously to the
finalization of the NDRA to provide manufacturers with a more concrete
definition of how the Agency will comply with existing statutory
obligations.
Response: We agree with the commenter and are updating section III.
of the NDRA to reflect that state utilization data are due no later
than 60 days from the end of the rebate period. While we appreciate the
comments, we do not believe that the description in section III.(a). of
the proposed NDRA of the Secretary's responsibilities in regards to
states reporting requirements to manufacturers conflicts with the
statute. Section 1927(b)(2)(A) of the Act provides the 60-day timeframe
for the states reporting obligations under the MDRP to provide relevant
information in a format established by the Secretary and section
III.(a). reflects that requirement. The rebate invoice (CMS-R-144) or
alternative information described is that established format.
Furthermore, we believe that the updated section III.(a). does not
weaken states' reporting requirements because states are not subject to
the agreement. States that opt to cover drugs are subject to applicable
statutory, regulatory and sub-regulatory guidance. While we updated the
paragraph in the proposed NDRA to be more inclusive of details, we have
not changed or noted a change in state process. Additionally, we
disagree that retaining the language that the Secretary ``. . . will
employ best efforts,'' which is similar to language in the current
rebate agreement, is contradictory to the statute or that it will lead
to confusion and be open for misinterpretation. The NDRA is an
agreement between the Secretary and the manufacturer, and is not the
appropriate vehicle to specifically address state reporting
requirements.
Comment: One commenter urged CMS to revise the new language at
section III.(a). to eliminate any perception that the timeliness
requirements apply only to FFS rebate claims since the new language
refers to information about Medicaid utilization of covered outpatient
drugs that were ``paid for'' during the rebate period. The commenter
noted that CMS distinguishes between manufacturer
[[Page 12778]]
rebate obligations which accrue for FFS units based on the date of
payment to pharmacies and MCO units based on the date of dispensing to
Medicaid enrollees. The commenter further noted that the statute refers
back to the number of units ``dispensed . . . for which payment was
made under the plan during the period, including such information
reported by MCOs . . . .'' Accordingly, the commenter recommended that
section III.(a). be revised to read, ``. . . that is, information about
Medicaid utilization of covered outpatient drugs that were dispensed
and for which payment was made under a Medicaid State plan or approved
waiver during the rebate period.''
Response: We agree with the commenter that the language in section
III.(a). could be misinterpreted to apply only to FFS rebate claims.
Therefore, we are revising section III.(a). to state ``. . .
information about Medicaid utilization of covered outpatient drugs that
were dispensed and/or paid for, as applicable during the rebate
period'' to clarify that timeliness requirements apply to both FFS and
MCO rebate claims.
D. Section IV. Penalty Provisions
1. Civil Monetary Penalties (CMPs)
Comment: One commenter recommended that CMS keep the phrase ``in
connection with a survey'' in the provision of the NDRA on Civil
Monetary Penalties (CMPs) in section IV.(a). because the underlying
statutory authority only authorizes the Secretary to impose CMPs on a
manufacturer that refuses a request for information in connection with
a survey about drug charges or prices. The commenter noted that the
Medicaid rebate statute states at section 1927(b)(3)(B) of the Act
that:
``The Secretary may impose a civil monetary penalty in an amount
not to exceed $100,000 on a wholesaler, manufacturer, or direct seller,
if the wholesaler, manufacturer, or direct seller of a covered
outpatient drug refuses a request for information about charges or
prices by the Secretary in connection with a survey under this
subparagraph or knowingly provides false information.''
The commenter believes that the language in the NDRA should
accurately reflect this statutory authority.
Response: We agree that the language in the NDRA should accurately
reflect the statutory language. Therefore, we are adding back in to
this section the phrase ``in connection with a survey''. Section
IV.(a). now reads as follows: ``The Secretary may impose a civil
monetary penalty under section III.(b)., as set forth in 1927(b)(3)(B)
of the Act and applicable regulations, on a wholesaler, manufacturer,
or direct seller of a covered outpatient drug, if a wholesaler,
manufacturer, or direct seller of a covered outpatient drug refuses a
request by the Secretary, or the Secretary's designee, for information
about covered outpatient drug charges or prices in connection with a
survey or knowingly provides false information, including in any of its
quarterly reports to the Secretary. The provisions of section 1128A of
the Act (other than section (a) (for amounts of penalties or additional
assessments) and (b)) shall apply as set forth in section 1927(b)(3)(B)
of the Act and applicable regulations.''
Comment: One commenter appreciated our reference to existing
statute and regulations in updating the penalty provisions of the NDRA,
but questioned the proposal to only cite relevant statute/regulation
without reference or summary of the text to which the user is referred.
In particular, the commenter noted that these revisions may prove
overly cumbersome in section IV.(c). that describes the CMPs that may
be imposed for failure to provide timely information on AMP, best
price, or base date AMP, and if CMS included only a reference to the
relevant statute, users would need to separately look up the different
penalty amounts referenced in the NDRA text, rather than be able to
reference them without requiring a document other than the NDRA itself.
Thus, the commenter requested that CMS update the text of the
provisions with specific dollar values and reference existing statute
and regulations, rather than just putting forward the latter.
Response: We disagree that the statutory and/or regulatory text be
restated in section IV.(c). of the NDRA, and that otherwise the
provision is overly cumbersome. As stated previously in response to
comments, our approach in the proposed and updated NDRA is to refer to
statute and/or regulations, as well as agency guidance, as opposed to
repeating such language in the NDRA, as we believe this decreases the
chance of inaccurate or conflicting NDRA text. The general provisions
of the NDRA incorporate such statutory requirements not explicitly
referenced in the NDRA. We have added language in the general
provisions to reflect this approach.
2. Remedies Available for Violations of the Agreement
Comment: One commenter recommended that CMS revise the language in
section IV.(d). to be even-handed and provide the same protection to
manufacturers. The commenter specifically recommended revising this
sentence to add ``or manufacturers'' to read, ``[n]othing in this
Agreement shall be construed to limit the remedies available to the
United States, states, or manufacturers for a violation of this
Agreement or any other provision of law.''
Response: Manufacturers are afforded protections under section V.
of the NDRA, which addresses dispute resolution procedures in the event
a manufacturer wishes to dispute state drug utilization data on the
rebate invoice. Therefore, we are not adding the reference to ``or
manufacturers'' as requested by the commenter.
E. Section V. Dispute Resolution Process
1. Timing of Dispute
Comment: One commenter requested greater clarification around the
timing and process of dispute resolution.
Response: We agree with the commenter with respect to clarifying
the timing of dispute resolution. Based on many years of experience in
assisting with dispute resolution efforts when asked by manufacturers
and states, we realize that 60 days is not enough time for a typical
dispute to be resolved. Therefore, section V.(c). of the updated NDRA
is changed from requiring a dispute to be resolved within 60 days
before moving to the state hearing process, to being resolved ``within
a reasonable time frame.'' Additionally, as noted in previous
responses, we encourage interested parties to go to our DRP web page,
https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/dispute-resolution/index.html, for more information
about our suggestions and information regarding dispute resolution.
2. Audit of State Drug Utilization Data
Comment: A few commenters noted the importance of manufacturers'
access to CLD and the need to ensure the accuracy of state-reported
data as critical mechanisms to avoid disputes in the first place, and
where they cannot be avoided, resolve them more efficiently and
expeditiously for all program participants. The commenter noted that
CMS requires that state invoices to manufacturers include certain
information but permit states to furnish that data at an aggregate
level in the rebate invoice. Commenters noted further that CMS also
makes it clear in the Final Rule that ``states will need to have
detailed, prescription-level information or other mutually-agreeable
[[Page 12779]]
data available for dispute resolution purposes, if requested by a
manufacturer in accordance with the state provision of information
requirements of section 1927(b)(2)(A) of the Act'' (81 FR 5272).
The commenters suggested that CMS specify in the NDRA that minimum
CLD elements needed to facilitate dispute resolution include (in
addition to the NDC, period covered, and whether the prescription is
fee-for-service or managed care) elements such as the pharmacy ID
(including pharmacy name and address), units, dispense date, 340B
identifier, unit of measure, provider ID (NPI) and any third party
payment. Commenters also recommended that CMS specify that states
provide CLD in a standard format, and electronically or in a
downloadable format on a quarterly basis.
Response: We disagree with the commenters' suggestions to revise
the updated NDRA to include specific requirements related to the CLD
that may be requested of states and used for payment validation. We
also do not believe that it is appropriate to include such detail in
the NDRA as it is an agreement between the Secretary and the
manufacturer, and is not the appropriate vehicle to specifically
address these issues. Manufacturers retain the right to request the
minimum CLD required to validate the utilization data received from the
state. We further disagree with the commenter that there is a minimum
set of CLD that should be expected along with State Drug Utilization
Data, as different CLD fields are needed depending on variables such as
provider setting, third-party co-pays, and the type of dispute or
potential dispute. Consistent with Manufacturer Release #95 and State
Release #173, we continue to encourage states to share the appropriate
minimum CLD for payment validation purposes on a case-by-case basis.
Program Releases are available on www.Medicaid.gov.
Comment: One commenter suggested that CMS recognize the need for
states to acknowledge disputes within a specified time period and to
provide relevant CLD to manufacturers within a specified time frame and
that CMS should revise our changes to section V.(d). so that it reads
as follows: ``Nothing in this section shall preclude the right of the
manufacturer to audit the state drug utilization data reported (or
required to be reported) by the state. The Secretary encourages the
manufacturer and the state to develop mutually beneficial audit
procedures.'' Commenters further suggested that at a minimum, however,
CMS shall require the state to make available to the manufacturer
claim-level data necessary to review or audit the State drug
utilization data.
Response: As the NDRA is an agreement between the Secretary and the
manufacturer, we disagree that we should incorporate a state's
obligation into the NDRA. However, as referenced in Manufacturer
Release #95 and State Release #173, as well as the ``Medicaid Drug
Rebate Data Guide for Labelers'' and ``Medicaid Drug Rebate Data Guide
for States'' (available as a download in the DDR system), we encourage
both manufacturers and states to share such information with others
involved in rebate payment and disputes. Official disputes must be
entered into by manufacturers via the Reconciliation of State Invoice
(ROSI) (Form CMS-304) or Prior Quarter Adjustment Statement (PQAS)
(Form CMS-304a), and operational instructions for the ROSI and PQAS are
provided in these data guides. Program Releases are available on
www.Medicaid.gov.
3. State Hearing Process
Comment: One commenter stated it is critical that CMS provide more
transparency about the state hearing process that is supposed to be
used to resolve disputes that cannot be resolved in good faith within
60 days. The commenter indicated that under current section V.(c). of
the current Rebate Agreement, if disputes cannot be resolved after this
60-day period, CMS shall require the state to make available to the
manufacturer the state hearing mechanism available under 42 CFR
447.253(e). However, the proposed rebate agreement deletes the
reference to Sec. 447.253(e) and instead refers to the state hearing
mechanism ``available to providers for Medicaid payment disputes.'' The
commenter indicated that this deletion may have been intended to be a
substantive change, since Sec. 447.253(e) concerns the appeal
procedure for providers to receive administrative review of ``payment
rates'' and would appreciate CMS clarifying whether the change it
proposes is substantive and (if so) what effect it would have.
The commenter further stated it is difficult to determine what the
process is that CMS are referencing with its proposed language and is
not certain whether CMS confirmed that such a process exists in each
state. The commenter further recommended that if CMS does not intend
for the proposed language to constitute a substantive change, CMS
should provide more clarity around the practical details regarding how
the dispute process available under Sec. 447.253(e) would work, such
as how a manufacturer would begin the dispute process, what procedures
would be used to facilitate dispute resolution, and where to look for
guidance on the process. Even if the proposed changes to section V.(c).
are meant to constitute a substantive change, the commenter indicated
it would still appreciate receiving guidance about the process
``available to providers for Medicaid payment disputes.''
Response: The current NDRA references the incorrect paragraph for
state hearings as Sec. 447.253(c); the commenter is correct that Sec.
447.253(e) is the correct provider hearing reference. The deletion of
the reference to the CFR cite was not intended to be a substantive
change. We have added the correct CFR cite (Sec. 447.253(e)) to
section V.(c). in the updated NDRA. Furthermore, we have issued
guidance for the state hearing process via State Release #181 and
Manufacturer Release #105. In these releases, we reminded states and
manufacturers that the state hearing process is an option available to
both states and manufacturers when they have reached an impasse through
the normal dispute resolution process, or when one of the parties is
not being responsive to another's efforts to engage in dispute
resolution. Given the variability in the states' hearing processes, we
recommended that each state make manufacturers aware of the process to
request such a hearing in that state. Program Releases are available on
www.Medicaid.gov.
4. Retain Section V.(e). From Current NDRA
Comment: A few commenters questioned the intent of removing section
V.(e). of the existing rebate agreement, which states, ``adjustments to
Rebate Payments shall be made if information indicates that either
Medicaid Utilization Information, AMP or Best Price were greater or
less than the amount previously specified.'' One commenter questioned
if it means disputed amounts are not subject to adjustment (either an
increase or decrease). Another commenter recommended that CMS retain
the current section (e) in the current section V and make adjustments
to the language to allow for adjustments that constitute both increases
and decreases in the rebate amount since Sec. 447.510(b)(1) requires
that ``a manufacturer must report to CMS any revision to AMP, best
price, customary prompt pay discounts, or nominal prices for a period
not to exceed 12 quarters from the quarter in which the data were
due.'' Another commenter specifically also
[[Page 12780]]
recommended including section (e) from the current NDRA but also
suggested that CMS revise the sentence to read, ``[t]o the extent that
changes in product, pricing, or related data cause increases or
decreases to previously submitted total rebate amounts, the
manufacturer will make appropriate payment adjustments in the same
timeframe as the current rebate invoice (that is, 38 days after the
state mails the state utilization data).''
Response: We do not believe that any revisions are necessary, as we
believe section V.(b). of the updated NDRA captures these concerns and
addresses these issues. As stated earlier in response to comments, we
updated language in section II.(f). regarding increases and decreases
in rebate amount, and believe that this provides sufficient information
on processing rebate increases and decreases.
5. General Request for DRP Guidance
Comment: One commenter recommended that CMS take this opportunity
to issue additional guidance that can facilitate dispute resolution.
Currently, this process can be costly for manufacturers and states, and
can delay payment of rebates in cases where disputed utilization data
turns out to be correct. The commenter further noted that the HHS
Office of Inspector General (OIG) has recommended additional steps to
prevent and resolve disputes and found that certain disputes occur
frequently due to poor-quality data (disputes over drugs with
complicated unit-of-measure conversions, physician-administered drugs,
340B purchased drugs, and terminated drugs). The commenter stated that
CMS could accelerate dispute resolution by revising the NDRA to
identify minimum steps that states could take to facilitate dispute
resolution and to provide that manufacturers will not be responsible
for interest payments during periods before these minimum steps are
taken.
Response: While we appreciate the comments, we disagree that
additional guidance on the dispute resolution process be set forth in
the NDRA. Dispute resolution is an alternative to the state hearing
mechanism, and is a process between the state and manufacturer. We have
no formal role in dispute resolution, but continue to assist to the
extent possible, when manufacturers and/or states request support in
resolving a dispute. Therefore, we will continue in our role as
facilitator when practical, and we encourage interested parties to
review our DRP web page, https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/dispute-resolution/index.html, for more information about our suggestions regarding
dispute resolution.
Comment: One commenter requested more information about our role in
facilitating dispute resolution between states and manufacturers. More
specifically, the commenter requested additional clarity around our
voluntary dispute resolution program process for states and
manufacturers such as how the (dispute) program works, how a
manufacturer can facilitate use of the program, our role in the dispute
process, and our point of contact for the program.
Response: As noted previously, this type of information is
generally distributed through operational guidance. In this case, we
release information about our role in dispute resolution, the process
to request our facilitation of disputes, and our points of contact on
our website at https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/dispute-resolution/index.html.
6. Retain Section VI. From Current NDRA
Comment: Several commenters stated CMS should not finalize the
deletion of section VI.(a). of the current NDRA, which pertains to
patient access to outpatient prescription drugs. The commenters stated
this provision recognizes that the access requirements in the rebate
statute are the reason that manufacturers sign the Medicaid rebate
agreement, and CMS has a responsibility to take action if states do not
fulfill their obligations under the rebate statute. One commenter
suggested that rather than deleting this provision, it should be
reinforced and further strengthened in the updated NDRA to conform to
the drug access requirements of section 1927 of the Act. The commenter
noted that CMS reaffirmed the states' statutory obligation to cover
covered outpatient drugs for which the relevant manufacturer has a
Medicaid drug rebate agreement in State Release #172 (https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Prescription-Drugs/Downloads/Rx-Releases/State-Releases/state-rel-172.pdf) in response to Hepatitis C virus (HCV) therapies being
unreasonably restricted by the states. This commenter suggested CMS
explicitly refer to the text of State Release #172 that states provide
Medicaid beneficiaries with access to prescribed medicines as described
under section 1927 of the Act. The commenter stated that CMS may choose
to continue to include this text in the ``dispute resolution'' section
of the NDRA, or include the text under section III, ``Secretary's
Responsibilities[.]''
Response: As stated previously in response to comments, our
approach in the proposed and updated NDRA is to refer to or cite
statute and/or regulations, as well as agency guidance, as opposed to
repeating such language expressly in the NDRA, as we believe this
decreases the chance of inaccurate or conflicting NDRA text. We believe
section VIII, the General Provisions section of the NDRA incorporates
such statutory requirements not explicitly referenced in other sections
of the NDRA. However, in order to ensure clarity on this point, we have
updated paragraph (a) of Section VIII, General Provisions to add an
introductory sentence that reads: ``This agreement is authorized by the
applicable provisions in sections 1902, 1903, 1905, and 1927 of the
Act, and the implementing regulations at 42 CFR part 447.'' Therefore,
in updating the NDRA we do not believe that the current section VI is
necessary. Moreover, the drug access requirements in section 1927 of
the Act continue to be binding on states, regardless of the inclusion
of the state requirement in the NDRA between the Secretary and
manufacturers. As the commenter noted, when specific drug access issues
arise, as most recently on the HCV drugs referenced in State Release
#172, we release agency guidance reminding states of drug access
requirements. We have published such guidance over the years, such as
State Release #38, about coverage of a new multiple sclerosis drug.
Also, we issued State Release #51, in response to proposed state
legislation that would limit drug coverage for states seeking to
leverage discounts from manufacturers, clarifying that such legislation
would not supersede drug coverage requirements in section 1927 of the
Act. We will continue, when circumstances arise, to remind states of
their coverage requirements under the MDRP. Program Releases are
available on www.Medicaid.gov.
F. Section VI. Confidentiality Provisions
Comment: One commenter agreed with our updated section VI.(b).,
which states that, ``[t]he manufacturer will hold state drug
utilization data confidential. If the manufacturer audits this
information or receives further information on such data, that
information shall also be held confidential. Except where otherwise
specified in the Act or Agreement, the
[[Page 12781]]
manufacturer will observe confidentiality statutes, regulations, and
other properly promulgated policy concerning such data.'' However, the
commenter recommended that CMS amend the section to recognize the
reality that manufacturers must often share drug utilization data with
contractors for various business reasons by adding language to section
VI.(b). to read, ``[t]his confidentiality provision does not prevent a
manufacturer from sharing drug utilization data with a contractor or
other agent that helps the manufacturer perform audits or otherwise
assess drug utilization data, provided that the contractor or agent
agrees to treat the drug utilization data confidentially.''
Another commenter requested that CMS clarify how the
confidentiality provisions relate to a manufacturers' use of third
parties for dispute resolution and outsourcing claims processing.
Response: We do not believe that the edits suggested by the
commenter are necessary as section VIII.(g). of the updated NDRA
provides for the incorporation of contractors in the terms ``State
Medicaid Agency'' and ``Manufacturer.'' However, we are revising
section VIII.(g). to provide further clarification on this matter.
Therefore, section VIII.(g). is being revised to read as follows:
``[t]he terms ``State Medicaid Agency'' and ``Manufacturer''
incorporate any contractors which fulfill responsibilities pursuant to
the agreement unless such contractors are specifically excluded in the
rebate agreement or such exclusion is specifically agreed to by an
appropriate CMS official.''
G. Section VII. Nonrenewal and Termination
1. Re-Entrance After Termination
Comment: One commenter is concerned that the language in section
VII.(d). which states that the manufacturer must make ``good faith
efforts to appeal or resolve matters pending with the OIG'' could be
misinterpreted to include ``matters pending with the OIG'' that are
unrelated to violations of a previous Medicaid rebate agreement.
Therefore, the commenter suggested revising the sentence to say that a
manufacturer may not enter into another rebate agreement until at least
one rebate period from the effective date of termination, ``and
provided that the manufacturer has addressed to the satisfaction of CMS
any outstanding violations from any previous rebate agreements,
including but not limited to payment of any outstanding rebates and
good faith efforts to appeal or resolve any disputes pending with the
OIG concerning violations of a previous rebate agreement.''
Response: We understand the commenter's concerns and have revised
the language in section VII.(d). to create two sentences which now
reads: If this rebate agreement is terminated, the manufacturer is
prohibited from entering into another rebate agreement as set forth in
section 1927(b)(4)(C) of the Act for at least one rebate period from
the effective date of the termination. The manufacturer must also
address to the satisfaction of CMS any outstanding violations from any
previous rebate agreement(s), including, but not limited to, payment of
any outstanding rebates and also make good faith efforts to appeal or
resolve matters pending with the OIG relating to the MDRP or exclusion
as referenced in subsection (c) of this section, unless the Secretary
finds good cause for earlier reinstatement.
H. Section VIII. General Provisions
1. Transfer of Ownership
Comment: One commenter requested that CMS make it clear that the
automatic assignment of rebate liability (as specified in section
VIII.(c). applies only when there is a transfer of ownership of the
manufacturer as a whole, and not a transfer of specific products or
product lines.
Response: Section VIII.(c). of the General Provisions section only
speaks to transfer of ownership of the manufacturer, and does not
reference transfer of specific products or product lines. We do not
believe any revisions to section VIII.(c). of the updated NDRA are
necessary.
2. Due Date Falls on Weekend or Federal Holiday
Comment: One commenter sought clarification from CMS regarding what
is meant by ``other item'' in the section that reads, ``In the event
that a due date falls on a weekend or federal holiday, the report or
other item will be due on the first business day following that weekend
or federal holiday.''
Response: The reference to ``other item'' is intended to refer to
anything due from the manufacturer to us per the rebate agreement.
3. Request for New Subsection: Rebate Payment Deadline
Comment: One commenter recommended that CMS include a new
subsection under section VIII in the NDRA to clarify the number of days
manufacturers have to pay late rebates before interest begins to
accrue. The commenter stated that this subsection should incorporate
the guidance CMS provided to manufacturers in Manufacturer Release #7
and #89, which states that, ``[i]nterest will begin accruing on
disputed or unpaid amounts 38 calendar days from the date the state
mails the state utilization data, as evidenced by the postmark by the
United States Postal Service or other common mail carrier on the
envelope (not a postage stamp).''
Response: As stated in response to previous comments, statute,
regulation, and agency guidance, such as Program Releases, are
incorporated by reference in section VIII, General Provisions. As
stated previously, we have updated paragraph (a) of Section VIII, to
add an introductory sentence that reads: ``This agreement is authorized
by the applicable sections of 1902, 1903, 1905 and 1927 of the Act, and
the implementing regulations at 42 CFR part 447.'' Therefore, we do not
believe it is necessary to specifically incorporate the language
suggested by the manufacturer in the updated NDRA.
I. Section IX. CMS-367 Forms of the Drug Rebate Agreement
Comment: One commenter stated that CMS should amend any forms
referenced in or attached to the NDRA through the same process by which
CMS is required to amend the NDRA itself (bilaterally). For example,
CMS proposed that the NDRA would include as an attachment certain CMS
forms (CMS-367a, CMS-367b, CMS-367c, and CMS-367d) that are used for
reporting data required by the NDRA. Additionally, CMS incorporated by
reference in section I.(t). of the proposed NDRA the CMS-R-144 form
(state rebate invoice).
While the commenter recognized that CMS has changed these forms in
the past through the Paperwork Reduction Act process, without
officially amending the rebate agreement, the commenter recommended
that CMS amend all forms associated with this NDRA in the same way that
CMS amend the NDRA itself. The commenter noted that section VIII.(h).
of the proposed NDRA states that ``except for the conditions specified
in sections II.(g). and VIII.(a). (which concern changes to the rebate
statute or implementing regulations), this agreement will not be
altered except by an amendment in writing signed by both parties . . .
,'' which means that (apart from changes associated with statutory and
regulatory changes) any changes made to the NDRA, including its
attachments, must be in writing and signed by both parties.
[[Page 12782]]
The commenter recommended that CMS extend these same requirements to
any forms that CMS choose to incorporate by reference, to ensure that
the substance of the NDRA cannot be altered by changes in standard CMS
forms that technically are not considered part of the NDRA itself.
Response: OMB-approved forms, when changed, are subject to a notice
and comment period as required by the Paperwork Reduction Act. We have
complied with these requirements and will continue to comply for future
updates to these forms. Therefore, we believe it is appropriate to
revise section VIII.(h). to include as part of the exclusions all
applicable OMB-approved forms. We have revised VIII.(h). to state that
``[e]xcept for the conditions specified in II.(g). and VIII.(a)., as
well as all applicable OMB-approved forms, this agreement will not be
altered except by an amendment in writing signed by both parties. No
person is authorized to alter or vary the terms unless the alteration
appears by way of a written amendment, signed by duly appointed
representatives of the Secretary and the manufacturer.''
J. Miscellaneous Comments
Comment: One commenter urged CMS to include in the updated NDRA the
existing mechanism that permits manufacturers to notify CMS of state
Medicaid program compliance concerns regarding drug coverage
requirements or if there is a pattern or history of inaccuracy in
Medicaid utilization reporting.
Response: We disagree with the commenter's suggestion that we
memorialize in the NDRA the details of how a manufacturer may contact
us regarding concerns with compliance with drug coverage requirements
or patterns/historical inaccuracies in state drug utilization data
reporting. We will continue to update any operational instructions on
the options available or suggestions for manufacturers to communicate
such issues to us.
Comment: Several commenters requested that CMS revise the NDRA to
more specifically enumerate state requirements with regard to the MDRP.
Response: We disagree that state requirements be enumerated in the
NDRA, as this is an agreement between the manufacturers and the
Secretary and is not the appropriate vehicle to specifically address
state requirements.
III. Provisions of the Final Notice
As stated previously, we are updating the NDRA to reflect the
changes in the Covered Outpatient Drugs final rule with comment period
that was published in the February 1, 2016 Federal Register (81 FR
5170), as well as operational and other legislative changes that have
occurred over the last 20 plus years since the NDRA was first issued in
1991. A sample of the finalized NDRA will be posted on the
www.Medicaid.gov. The publication of the final notice in the Federal
Register constitutes written notice of good cause to terminate all old
rebate agreements as of the first day of the full calendar quarter
which begins at least 6 months after the effective date of the updated
NDRA. As noted in the proposed notice, the updated NDRA will need to be
signed by all participating manufacturers, as well as new manufacturers
joining the program (81 FR 78817). Therefore, all currently
participating manufacturers wishing to maintain their participation in
the MDRP will need to work with CMS to sign and effectuate an updated
NDRA for each labeler code by the compliance date specified in the
DATES section of this public notice. For any current manufacturer that
does not sign and effectuate an updated NDRA within the time frame
specified above, the result would be termination of the existing NDRA.
Per section 1927(b)(4)(B)(iii) of the Act, termination of a rebate
agreement does not affect rebates due under that agreement before the
effective date of its termination. We will be providing additional
instructions and guidance pertaining to how to sign and effectuate the
updated NDRA through subregulatory guidance.
Furthermore, prospective manufacturers that request a new NDRA, or
reinstatement of a previously active NDRA once the updated NDRA is
available, would be subject to the current process of data submission
and verification prior to the execution of a NDRA.
Additionally, we are further clarifying that, in keeping with the
requirements in the previous and updated NDRA and CMS's policy guidance
in Manufacturer Releases #13 and #48, manufacturers that wish to
participate in the MDRP are required to report all their covered
outpatient drugs to CMS, regardless of labeler code. Therefore, in an
effort to prevent selective reporting of NDCs, manufacturers must
ensure that all associated labeler codes with covered outpatient drugs
enter into a rebate agreement in order to comply with the terms of the
NDRA. This requirement is found under section II, Manufacturer's
Responsibilities, subsection (a) of the previous NDRA, and in section
II, Manufacturer's Responsibilities, subsection (b) of the updated
NDRA. When a participating manufacturer requests an agreement for a
newly acquired labeler code that has covered outpatient drugs, that
NDRA request will be subject to verification of their proposed covered
outpatient drug list. Program releases are available at
www.Medicaid.gov.
A copy of the updated NDRA is included in the Addendum of this
notice. Below is a summary of the revisions and edits to the updated
NDRA that have been made as a result of comments or to provide
conforming or clarifying edits.
A. Definitions
In response to a comment, we are retaining the definitions
of ``Depot Price,'' ``Single-Award Contract,'' and ``Single-Award
Contract Price,'' without any revisions to the definitions. As such all
numbering is adjusted to account for the retention of these
definitions.
We are adding an opening quotation mark to the definition
of ``Marketed'' as it was omitted from the draft NDRA.
The definition of ``Rebate Period'' is revised to add
``section 1927(k)(8) of the Act as implemented by'' after the word
``in'' and before ``42 CFR 447.502.''
The definition of ``State Drug Utilization Data'' is
revised to replace the word ``reimbursed'' with ``dispensed and/or paid
for, as applicable'' so that it now reads: ``. . . covered outpatient
drugs dispensed and/or paid for, as applicable during a rebate period.
. . .''
The definition of ``State Drug Utilization Data'' is also
revised to add ``(OMB control number: 0938-0582)'' after ``CMS-R-144''
in order to properly identify the form as being OMB approved.
The definition of ``State Medicaid Agency'' is revised to
add ``and 1927(k)(9) of the Act'' after ``sections 1902(a)(5)'' and
before ``to administer'' so that it now reads ``. . . under sections
1902(a)(5) and 1927(k)(9) of the Act to administer . . .''.
The definition of ``Unit'' is revised to add ``(OMB
control number 0938-0578)'' after ``CMS-367c form'' in order to
properly identify the form as being OMB approved.
B. Manufacturer Responsibilities
Subsection (a)--Has been revised to add ``for the Legal,
Invoice, and Technical contacts'' between the words ``contact'' and
``at'' so that it now reads: ``. . . point of contact for the Legal,
Invoice, and Technical contacts at a United States address . . . .''
Subsection (b)--Is revised to add ``for all covered
outpatient drugs in all labeler codes of a manufacturer'' after ``is
signed'' and before ``calculated'' so that it now reads ``. . .
Beginning with
[[Page 12783]]
the quarter in which the National Drug Rebate Agreement (rebate
agreement) is signed for all covered outpatient drugs of all labeler
codes of a manufacturer, calculate, and report . . .''. It is also
revised to add the words ``calculate a URA and'' after ``required to''
and before ``make'' so that it now reads ``. . . manufacturers are
required to calculate a URA and make a rebate payment . . . ,'' and is
revised to add the following sentences to the end of the subsection:
``CMS may calculate a URA based on manufacturer-submitted product and
pricing data and provide the URA to states in order to facilitate
rebate billing. However, CMS's URA calculation does not relieve the
manufacturer of its responsibility to calculate the URA.''
Subsection (c)--Has been revised to remove the phrase ``in
some cases'' from the third sentence so that it now reads, ``CMS uses
drug information listed with FDA, such as Marketing Category and Drug
Type, to be able to verify that an NDC meets the definition of a
covered outpatient drug, therefore, manufacturers should ensure that
their NDCs are electronically listed with FDA.''
Subsection (d)--First, the first sentence is revised to
add ``(OMB control number 0938-0578)'' after ``CMS-367a form'' in order
to properly identify the form as being OMB approved. Second, the third
sentence is revised to read, ``[t]he manufacturer agrees to provide
such information not later than 30 days after the end of each rebate
period beginning with the effective date quarter.'' Third, the fourth
sentence is revised to read, ``[a]djustments to all prior quarterly
pricing data must be reported for a period not to exceed 12 quarters
from when the pricing data were originally due as required under 42 CFR
447.510(b).''
Subsection (e)--First, the first sentence is revised to
add ``(OMB control number 0938-0578)'' after ``CMS-367b form'' in order
to properly identify the form as being OMB approved. Second, the second
sentence is revised to read, ``[t]he manufacturer agrees to provide
such information not later than 30 days after the end of the month of
the effective date, and not later than 30 days after the end of each
month thereafter.''
Subsection (f)--First, in accordance with section
1927(b)(3)(A) of the Act, the first sentence is revised to replace the
word ``within'' with ``not later than'' after ``payments'' and before
``30 days'' so that it now reads ``Except as provided under V.(b)., to
make rebate payments not later than 30 days after receiving the state
rebate invoice.'' Second, it is revised to add the following sentence
to the end of the subsection: ``To the extent that changes in product,
pricing, or related data cause decreases to previously submitted total
rebate amounts, the manufacturer should communicate with the states
regarding where to apply the line-item (NDC-level) credit.''
Subsection (i)--Is revised to add ``(OMB control number
0938-0578)'' after ``CMS-367d form'' in order to properly identify the
form as being OMB approved.
Subsection (k)--The reference to ``42 CFR 447.534'' in the
last sentence of the subsection is replaced with ``42 CFR 447.510'' as
this is the valid regulatory reference.
C. Secretary Responsibilities
Subsection (a)--In accordance with section 1927(b)(2)(A)
of the Act, the first sentence is revised to replace the word
``within'' with ``not later than'' after ``manufacturer,'' and ``60
days'' and to add ``dispensed and/or'' before ``paid for,'' and to add
the ``as applicable'' after ``paid for'' so that it now reads: ``The
Secretary will employ best efforts to ensure the State Medicaid Agency
shall report to the manufacturer, no later than 60 days of the last day
of each rebate period, the rebate invoice (CMS-R-144) or the minimum
utilization information as described in section II.(f). of this
agreement, that is, information about Medicaid utilization of covered
outpatient drugs that were dispensed and/or paid for, as applicable,
during the rebate period.''.
D. Penalty Provisions
Subsection (a)--Is revised to add ``in connection with a
survey'' after ``prices'' and before ``or'' in the first sentence.
Subsection (d)--Is revised to add ``government'' after
``United States.''
E. Dispute Resolutions
Subsection (a)--Is revised to add the OMB Control number
associated with CMS-304 and CMS-304(a) forms after the reference to
each form. The paragraph now read: ``In the event a manufacturer
discovers a potential discrepancy with state drug utilization data on
the rebate invoice, which the manufacturer and state in good faith are
unable to resolve prior to the payment due date, the manufacturer will
submit a Reconciliation of State Invoice (ROSI) form, the CMS-304 (OMB
control number: 0938-0676), to the state. If such a discrepancy is
discovered for a prior rebate period's invoice, the manufacturer will
submit a Prior Quarter Adjustment Statement (PQAS) form, CMS-304a (OMB
control number: 0938-0676), to the state.''
Subsection (c)--The phrase ``shall require'' is replaced
with ``will employ best efforts to ensure,'' and the phrase ``within 60
days'' is replaced by ``within a reasonable time frame'' in both
instances, and the reference to ``42 CFR 447.253(e)'' is added in
parentheses to the end of the subsection so that it now reads: ``The
state and the manufacturer will use their best efforts to resolve a
dispute arising under (a) or (b) above within a reasonable time frame
after the state's receipt of the manufacturer's ROSI/PQAS. In the event
that the state and manufacturer are not able to resolve the dispute
within a reasonable time frame, CMS will employ best efforts to ensure
the state makes available to the manufacturer the same state hearing
mechanism available to providers for Medicaid payment disputes (42 CFR
447.253(e)).''.
F. Confidentiality Provisions
This section is finalized as proposed.
G. Nonrenewal and Termination
Subsection (a)--Is revised to add ``from the date
specified in section II.(h).,'' between ``year'' and ``unless'' so that
in now reads: ``. . . successive terms of one year from the date
specified in section II.(h)., unless the manufacturer . . . .''
Subsection (b)--The first paragraph is revised to add
``and section 1927(b)(4)(B)(ii) of the Act'' after ``this agreement''
and before ``the manufacturer'' so that it now reads: ``In accordance
with section VII.(a). of this agreement and section 1927(b)(4) of the
Act, the manufacturer may terminate the agreement for any reason . .
.''. The second paragraph, is revised to add an ``s'' to the end of
``cause'' to make it plural in both instances.
Subsection (d)--Is revised to add a period after the word
``termination'' and create a new sentence that begins ``The
manufacturer must also address . . .''
Subsection (d)--Is also revised to add ``also make''
before ``good faith efforts in this new second sentence.
Subsection (d)--Is further revised to add ``per subsection
(c) of this section'' between ``the OIG'' and ``unless'' so it now
reads ``. . . resolve matters pending with the OIG per subsection (c)
of this section, unless the Secretary finds . . .''.
H. General Provisions
Subsection (a)--Is revised to add the following sentence
to the beginning of the subsection: ``This agreement is authorized by
the applicable provisions
[[Page 12784]]
of sections 1902, 1903, 1905, and 1927 of the Act, and the implementing
regulations at 42 CFR part 447.''.
Subsection (f)--Is changed to replace the word ``scheme''
with ``construct''.
Subsection (g)--Is revised to add ``such contractors are''
between ``unless'' and ``specifically,'' to replace ``provided for''
with ``excluded,'' and to add ``such exclusion is'' between ``or'' and
``specifically'' so that it now reads: The terms ``State Medicaid
Agency'' and ``Manufacturer'' incorporate any contractors which fulfill
responsibilities pursuant to the agreement unless such contractors are
specifically excluded in the rebate agreement or such exclusion is
specifically agreed to by an appropriate CMS official.
Subsection (h)--Is revised to add ``as well as applicable
OMB-approved forms,'' between ``VIII.(a).,'' and ``this agreement'' and
to remove ``except by an amendment in writing signed by both parties.
No person is authorized to alter or vary the terms unless the
alteration appears by way of a written amendment, signed by duly
appointed representatives of the Secretary and the manufacturer.'' so
that it now reads: ``(h) Except for the conditions specified in II.(g).
and VIII.(a)., as well as applicable OMB-approved forms, this agreement
will not be altered.''.
I. CMS-367
This section is finalized as proposed.
J. Signatures
This section is finalized as proposed.
IV. Collection of Information Requirements
As stated in section 4711(f) of the Omnibus Budget Reconciliation
Act of 1990, Chapter 35 of title 44, United States Code, and Executive
Order 12291 shall not apply to information and regulations required for
purposes of carrying out this Act and implementing the amendments made
by this Act. Consequently, there is no need for review by the Office of
Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
As discussed in sections I and II of this final notice, we have
revised the NDRA to add references to the appropriate CMS forms,
consisting of: CMS-R-144 (OMB control number: 0938-0582), CMS-367 (OMB
control number 0938-0578), and CMS-304 (OMB control number: 0938-0676).
While the forms are referenced within the NDRA, there are no new or
revised collection of information requirements or burden resulting from
the updated NDRA. The forms are simply being referenced for clarity.
Addendum--Updated Agreement:
National Drug Rebate Agreement Between the Secretary of Health and
Human Services (Hereinafter Referred to as ``the Secretary'') and the
Manufacturer
The Secretary, on behalf of the U.S. Department of Health and
Human Services and all states which have a Medicaid State Plan
approved under 42 U.S.C. 1396a, and the manufacturer, on its own
behalf, for purposes of section 1927 of the Social Security Act
(``the Act''), 42 U.S.C. 1396r-8, hereby agree to the following:
I. Definitions
The terms defined in this section will, for the purposes of this
agreement, have the meanings specified in section 1927 of the Act
and implementing Federal regulations, as interpreted and applied
herein:
(a) ``Average Manufacturer Price (AMP)'' will have the meaning
set forth in section 1927(k)(1) of the Act as implemented by 42 CFR
447.504.
(b) ``Base Consumer Price Index-Urban (CPI-U)'' is the CPI-U for
September, 1990. For drugs approved by the Food and Drug
Administration (FDA) after October 1, 1990, ``Base CPI-U'' means the
CPI-U for the month before the month in which the drug was first
marketed.
(c) ``Base Date AMP'' will have the meaning set forth in
sections 1927(c)(2)(A)(ii)(II) and 1927(c)(2)(B) of the Act.
(d) ``Best Price'' will have the meaning set forth in section
1927(c)(1)(C) of the Act as implemented by 42 CFR 447.505.
(e) ``Bundled Sale'' will have the meaning set forth in 42 CFR
447.502.
(f) ``Centers for Medicare & Medicaid Services (CMS)'' means the
agency of the U.S. Department of Health and Human Services having
the delegated authority to operate the Medicaid Program.
(g) ``Consumer Price Index-Urban (CPI-U)'' will have the meaning
set forth in 42 CFR 447.502.
(h) ``Covered Outpatient Drug'' will have the meaning set forth
in sections 1927(k)(2), (k)(3) and (k)(4) of the Act as implemented
by 42 CFR 447.502.
(i) ``Depot Price'' means the price(s) available to any depot of
the federal government, for purchase of drugs from the Manufacturer
through the depot system of procurement.
(j) ``Innovator Multiple Source Drug'' will have the meaning as
set forth in section 1927(k)(7)(A)(ii) of the Act as implemented by
42 CFR 447.502.
(k) ``Manufacturer'' will have the meaning as set forth in
section 1927(k)(5) of the Act as implemented by 42 CFR 447.502.
(l) ``Marketed'' means that a covered outpatient drug is
available for sale by a manufacturer in the states.
(m) ``Monthly AMP'' will have the meaning as set forth in 42 CFR
447.510.
(n) ``Multiple Source Drug'' will have the meaning as set forth
in section 1927(k)(7)(A)(i) of the Act as implemented by 42 CFR
447.502.
(o) ``National Drug Code (NDC)'' will have the meaning as set
forth in 42 CFR 447.502.
(p) ``Non-innovator Multiple Source Drug'' will have the meaning
as set forth in section 1927(k)(7)(A)(iii) of the Act as implemented
by 42 CFR 447.502.
(q) ``Quarterly AMP'' will have the meaning as set forth in 42
CFR 447.504.
(r) ``Rebate period'' will have the meaning as set forth in
section 1927(k)(8) of the Act as implemented by 42 CFR 447.502.
(s) ``Secretary'' means the Secretary of the U.S. Department of
Health and Human Services, or any successor thereto, or any officer
or employee of the U.S. Department of Health and Human Services or
successor agency to whom the authority to implement this agreement
has been delegated. In this agreement, references to CMS indicate
such successor authority.
(t) ``Single-Award Contract'' means a contract between the
federal government and a Manufacturer resulting in a single supplier
for a Covered Outpatient Drug within a class of drugs. The Federal
Supply Schedule is not included in this definition as a single award
contract.
(u) ``Single-Award Contract Price'' means a price established
under a Single-Award Contract.
(v) ``Single Source Drug'' will have the meaning set forth in
section 1927(k)(7)(A)(iv) of the Act as implemented by 42 CFR
447.502.
(w) ``State Drug Utilization Data'' means the total number of
both fee-for-service (FFS) and managed care organization (MCO) units
of each dosage form and strength of the manufacturer's covered
outpatient drugs dispensed and/or paid for, as applicable during a
rebate period under a Medicaid State Plan, other than units
dispensed to Medicaid beneficiaries that were purchased by covered
entities through the drug discount program under section 340B of the
Public Health Service Act; state utilization data is supplied on the
CMS-R-144 form (OMB control number: 0938-0582) (that is, the state
rebate invoice).
(x) ``States'' will have the meaning as set forth in 42 CFR
447.502.
(y) ``State Medicaid Agency'' means the agency designated by a
state under sections 1902(a)(5) and 1927(k)(9) of the Act to
administer or supervise the administration of the Medicaid program.
(z) ``Unit'' means drug unit in the lowest dispensable amount.
The manufacturer will specify the unit information associated with
each covered outpatient drug per the instructions provided in CMS-
367c (OMB control number 0938-0578).
(aa) ``Unit Rebate Amount (URA)'' means the computed amount to
which the state drug utilization data is applied by states in
invoicing the manufacturer for the rebate payment due.
(bb) ``United States'' will have the meaning as set forth in 42
CFR 447.502.
(cc) ``Wholesaler'' will have the meaning as set forth in
section 1927(k)(11) of the Act as implemented by 42 CFR 447.502.
II. Manufacturer's Responsibilities
In order for the Secretary to authorize that a state receive
payment for the
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manufacturer's drugs under Title XIX of the Act, 42 U.S.C. 1396 et
seq., the manufacturer agrees to the requirements as implemented by
42 CFR 447.510 and the following:
(a) The manufacturer shall identify an individual point of
contact for the Legal, Invoice, and Technical contacts at a United
States address to facilitate the necessary communications with
states with respect to rebate invoice issues.
(b) Beginning with the quarter in which the National Drug Rebate
Agreement (rebate agreement) is signed for all covered outpatient
drugs of all labeler codes of a manufacturer, calculate, and report
all required pricing data on every covered outpatient drug by NDC in
accordance with section 1927 of the Act and as implemented by 42 CFR
447.510. Furthermore, except as provided under section V.(b). of
this agreement, manufacturers are required to calculate a URA and
make a rebate payment in accordance with each calculated URA to each
State Medicaid Agency for the manufacturer's covered outpatient
drug(s) by NDC paid for by the state during a rebate period. CMS may
calculate a URA based on manufacturer-submitted product and pricing
data and provide the URA to states in order to facilitate rebate
billing. However, CMS's URA calculation does not relieve the
manufacturer of its responsibility to calculate the URA.
(c) In accordance with the specifications pursuant to Office of
Management and Budget (OMB)-approved CMS-367c form, report all
covered outpatient drugs and corresponding drug product, pricing,
and related data to the Secretary, upon entering into this
agreement. This information is to be updated as necessary to include
new NDCs and updates to existing NDCs. CMS uses drug information
listed with FDA, such as Marketing Category and Drug Type, to be
able to verify that an NDC meets the definition of a covered
outpatient drug, therefore, manufacturers should ensure that their
NDCs are electronically listed with FDA. Reports to CMS should
include all applicable NDCs identifying the drug product which may
be dispensed to a beneficiary, including package NDCs (outer package
NDCs and inner package NDCs).
(d) Beginning with the effective date quarter and in accordance
with the specifications pursuant to OMB-approved CMS-367a form (OMB
control number 0938-0578), report quarterly pricing data to the
Secretary for all covered outpatient drugs in accordance with 42 CFR
447.510. This includes reporting for any package size which may be
dispensed to the beneficiary. The manufacturer agrees to provide
such information not later than 30 days after the end of each rebate
period beginning with the effective date quarter. Adjustments to all
prior quarterly pricing data must be reported for a period not to
exceed 12 quarters from when the pricing data were originally due as
required under 42 CFR 447.510(b).
(e) In accordance with the OMB-approved CMS-367b form (OMB
control number 0938-0578), report information including monthly AMPs
and monthly AMP units for all covered outpatient drugs in accordance
with 42 CFR 447.510. The manufacturer agrees to provide such
information not later than 30 days after the end of the month of the
effective date, and not later than 30 days after the end of each
month thereafter.
(f) Except as provided under V.(b)., to make rebate payments not
later than 30 days after receiving the state rebate invoice. The
manufacturer is responsible for timely payment of the rebate within
30 days so long as the state invoice contains, at a minimum, the
number of units paid by NDC in accordance with 1927(b)(1) of the
Act. To the extent that changes in product, pricing, or related data
cause increases to previously-submitted total rebate amounts, the
manufacturer will be responsible for timely payment of those
increases in the same 30-day time frame as the current rebate
invoice. To the extent that changes in product, pricing, or related
data cause decreases to previously-submitted total rebate amounts,
the manufacturer should communicate with the states regarding where
to apply the line-item (NDC-level) credit.
(g) To comply with the conditions of 42 U.S.C. 1396r-8, changes
thereto, implementing regulations, agency guidance and this
Agreement.
(h) In accordance with 1927(a)(1) of the Act, rebate agreements
between the Secretary and the manufacturer entered into before March
1, 1991 are retroactive to January 1, 1991. Rebate agreements
entered into on or after March 1, 1991 shall have a mandatory
effective date equal to the first day of the rebate period that
begins more than 60 days after the date the agreement is entered
into. Rebate agreements entered into on or after November 29, 1999
will also have an effective date equal to the date the rebate
agreement is entered into that will permit optional state coverage
of the manufacturer's NDCs as of that date.
(i) To obtain and maintain access to the system used by the
Medicaid Drug Rebate program, use that system to report required
data to CMS, and ensure that their contact information is kept
updated as required in the OMB-approved CMS-367d form (OMB control
number 0938-0578).
(j) To continue to make a rebate payment on all of its covered
outpatient drugs for as long as an agreement with the Secretary is
in force and state utilization data reports that payment was made
for that drug, regardless of whether the manufacturer continues to
market that drug. If there are no sales by the manufacturer during a
rebate period, the AMP and best price reported in the prior rebate
period should be used in calculating rebates.
(k) To keep records (written or electronic) of the data and any
other material from which the calculations of AMP and best price
were derived in accordance with 42 CFR 447.510, and make such
records available to the Secretary upon request. In the absence of
specific guidance in section 1927 of the Act, federal regulations
and the terms of this agreement, the manufacturer may make
reasonable assumptions in its calculations of AMP and best price,
consistent with the purpose of section 1927 of the Act, federal
regulations and the terms of this agreement. A record (written or
electronic) explaining these assumptions must also be maintained by
the manufacturer in accordance with the recordkeeping requirements
in 42 CFR 447.510, and such records must be made available to the
Secretary upon request.
(l) To notify CMS of any filing of bankruptcy, and to transmit
such filing to CMS within seven days of the date of filing.
III. Secretary's Responsibilities
(a) The Secretary will employ best efforts to ensure the State
Medicaid Agency shall report to the manufacturer, not later than 60
days after the last day of each rebate period, the rebate invoice
(CMS-R-144) or the minimum utilization information as described in
section II.(f). of this agreement, that is, information about
Medicaid utilization of covered outpatient drugs that were dispensed
and/or paid for, as applicable, during the rebate period.
Additionally, the Secretary will expect any changes to prior
quarterly state drug utilization data to be reported at the same
time.
(b) The Secretary may survey those wholesalers and manufacturers
that directly distribute their covered outpatient drugs to verify
manufacturer prices and may impose civil monetary penalties as set
forth in section 1927(b)(3)(B) of the Act and section IV of this
agreement.
(c) The Secretary may audit manufacturer information reported
under section 1927(b)(3)(A) of the Act.
IV. Penalty Provisions
(a) The Secretary may impose a civil monetary penalty under
section III.(b). as set forth in 1927(b)(3)(B) of the Act and
applicable regulations, on a wholesaler, manufacturer, or direct
seller of a covered outpatient drug, if a wholesaler, manufacturer,
or direct seller of a covered outpatient drug refuses a request by
the Secretary, or the Secretary's designee, for information about
covered outpatient drug charges or prices in connection with a
survey or knowingly provides false information, including in any of
its quarterly reports to the Secretary. The provisions of section
1128A of the Act (other than subsection (a) (with respect to amounts
of penalties or additional assessments) and (b)) shall apply as set
forth in section 1927(b)(3)(B) of the Act and applicable
regulations.
(b) The Secretary may impose a civil monetary penalty, for each
item of false information as set forth in 1927(b)(3)(C)(ii) of the
Act and applicable regulations.
(c) The Secretary may impose a civil monetary penalty for
failure to provide timely information on AMP, best price or base
date AMP. The amount of the penalty shall be determined as set forth
in 1927(b)(3)(C)(i) of the Act and applicable regulations.
(d) Nothing in this Agreement shall be construed to limit the
remedies available to the United States government or the states for
a violation of this Agreement or any other provision of law.
V. Dispute Resolution
(a) In the event a manufacturer discovers a potential
discrepancy with state drug utilization data on the rebate invoice,
which the manufacturer and state in good faith are
[[Page 12786]]
unable to resolve prior to the payment due date, the manufacturer
will submit a Reconciliation of State Invoice (ROSI) form, the CMS-
304 (OMB control number: 0938-0676), to the state. If such a
discrepancy is discovered for a prior rebate period's invoice, the
manufacturer will submit a Prior Quarter Adjustment Statement (PQAS)
form, CMS-304a (OMB control number: 0938-0676), to the state.
(b) If the manufacturer disputes in good faith any part of the
state drug utilization data on the rebate invoice, the manufacturer
shall pay the state for the rebate units not in dispute within the
required due date in II.(f). Upon resolution of the dispute, the
manufacturer will either pay the balance due, if any, plus interest
as set forth in section 1903(d)(5) of the Act, or be issued a credit
by the state by the due date of the next quarterly payment in II(f).
(c) The state and the manufacturer will use their best efforts
to resolve a dispute arising under (a) or (b) above within a
reasonable time frame after the state's receipt of the
manufacturer's ROSI/PQAS. In the event that the state and
manufacturer are not able to resolve the dispute within a reasonable
time frame, CMS will employ best efforts to ensure the state makes
available to the manufacturer the same state hearing mechanism
available to providers for Medicaid payment disputes (42 CFR
447.253(e)).
(d) Nothing in this section shall preclude the right of the
manufacturer to audit the state drug utilization data reported (or
required to be reported) by the state. The Secretary encourages the
manufacturer and the state to develop mutually beneficial audit
procedures.
(e) The state hearing mechanism is not binding on the Secretary
for purposes of the Secretary's authority to implement the civil
money penalty provisions of the statute or this agreement.
VI. Confidentiality Provisions
(a) Pursuant to section 1927(b)(3)(D) of the Act and this
agreement, information disclosed by the manufacturer in connection
with this agreement is confidential and, notwithstanding other laws,
will not be disclosed by the Secretary or State Medicaid Agency in a
form which reveals the manufacturer, or prices charged by the
manufacturer, except as authorized under section 1927(b)(3)(D).
(b) The manufacturer will hold state drug utilization data
confidential. If the manufacturer audits this information or
receives further information on such data, that information shall
also be held confidential. Except where otherwise specified in the
Act or agreement, the manufacturer will observe confidentiality
statutes, regulations, and other properly promulgated policy
concerning such data.
(c) Notwithstanding the nonrenewal or termination of this
agreement for any reason, these confidentiality provisions will
remain in full force and effect.
VII. Nonrenewal and Termination
(a) Unless otherwise terminated by either party pursuant to the
terms of this agreement, the agreement shall be effective beginning
on the date specified in section II.(h). of this agreement and shall
be automatically renewed for additional successive terms of one year
from the date specified in section II.(h)., unless the manufacturer
gives written notice of intent not to renew the agreement at least
90 days before the end of the current period.
(b) In accordance with section VII.(a). of this agreement and
section 1927(b)(4)(B)(ii) of the Act, the manufacturer may terminate
the agreement for any reason, and such termination shall become
effective the later of the first day of the first rebate period
beginning 60 days after the manufacturer gives written notice
requesting termination, or CMS initiates termination via written
notice to the manufacturer.
The Secretary may terminate the agreement for failure of a
manufacturer to make rebate payments to the state(s), failure to
report required data, for other violations of this agreement, or
other good causes upon 60 days prior written notice to the
manufacturer of the existence of such violation or other good
causes. The Secretary shall provide, upon request, a manufacturer
with a hearing concerning such a termination, but such hearing shall
not delay the effective date of the termination.
(c) Manufacturers on the Office of Inspector General's (OIG's)
List of Excluded Individuals/Entities (Exclusion List) will be
subject to immediate termination from the Medicaid drug rebate
program unless and until the manufacturer is reinstated by the OIG.
Appeals of exclusion and any reinstatement will be handled in
accordance with section 1128 of the Act and applicable regulations.
Manufacturers that are on the OIG Exclusion List and are reinstated
by the OIG under certain circumstances may be evaluated for
reinstatement to the Medicaid drug rebate program by CMS.
Reinstatement to the Medicaid drug rebate program would be for the
next rebate period that begins more than 60 days from the date of
the OIG's reinstatement of the manufacturer after exclusion.
(d) If this rebate agreement is terminated, the manufacturer is
prohibited from entering into another rebate agreement as set forth
in section 1927(b)(4)(C) of the Act for at least one rebate period
from the effective date of the termination. The manufacturer must
also address to the satisfaction of CMS any outstanding violations
from any previous rebate agreement(s), including, but not limited
to, payment of any outstanding rebates and also make good faith
efforts to appeal or resolve matters pending with the OIG relating
to the MDRP or exclusion as referenced in subsection (c) of this
section, unless the Secretary finds good cause for earlier
reinstatement.
(e) Any nonrenewal or termination will not affect rebates due
before the effective date of termination.
VIII. General Provisions
(a) This agreement is authorized by the applicable provisions of
sections 1902, 1903, 1905, and 1927 of the Act, and the implementing
regulations at 42 CFR part 447. This agreement is subject to any
changes in the Medicaid statute or regulations that affect the
rebate program.
(b) Any notice required to be given pursuant to the terms and
provisions of this agreement will be permitted in writing or
electronically.
Notice to the Secretary will be sent to: Centers for Medicaid
and CHIP Services, Disabled & Elderly Health Programs Group,
Division of Pharmacy, Mail Stop S2-14-26, 7500 Security Blvd.,
Baltimore, MD 21244.
The CMS address may be updated upon notice to the manufacturer.
Notice to the manufacturer will be sent to the email and/or
physical mailing address as provided under section X of this
agreement and updated upon manufacturer notification to CMS at the
email and/or address in this agreement.
(c) In the event of a transfer in ownership of the manufacturer,
this agreement and any outstanding rebate liability are
automatically assigned to the new owner subject to the conditions as
set forth in section 1927 of the Act.
(d) Nothing in this agreement will be construed to require or
authorize the commission of any act contrary to law. If any
provision of this agreement is found to be invalid by a court of
law, this agreement will be construed in all respects as if any
invalid or unenforceable provision were eliminated, and without any
effect on any other provision.
(e) Nothing in this agreement shall be construed as a waiver or
relinquishment of any legal rights of the manufacturer or the
Secretary under the Constitution, the Act, other federal laws, or
state laws.
(f) The rebate agreement shall be construed in accordance with
Federal law and ambiguities shall be interpreted in the manner which
best effectuates the statutory construct.
(g) The terms ``State Medicaid Agency'' and ``Manufacturer''
incorporate any contractors which fulfill responsibilities pursuant
to the agreement unless such contractors are specifically excluded
in the rebate agreement or such exclusion is specifically agreed to
by an appropriate CMS official.
(h) Except for the conditions specified in II.(g). and
VIII.(a)., as well as applicable OMB-approved forms, this agreement
will not be altered.
(i) In the event that a due date falls on a weekend or Federal
holiday, the report or other item will be due on the first business
day following that weekend or Federal holiday.
IX. CMS-367
CMS-367 attached hereto is part of this agreement.
X. Signatures
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Dated: February 20, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: March 16, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-05947 Filed 3-22-18; 8:45 am]
BILLING CODE 4120-01-P