42 USC 1395w-114a - Medicare coverage gap discount program

U.S Code last checked for updates: May 20, 2024

§ 1395w–114a.

Medicare coverage gap discount program

(a)

Establishment

(b)

Terms of agreement

(1)

In general

(A)

Agreement

(B)

Provision of discounted prices at the point-of-sale

(C)

Timing of agreement

(i)

Special rule for 2011

(ii)

2012 and subsequent years

(2)

Provision of appropriate data

(3)

Compliance with requirements for administration of program

(4)

Length of agreement

(A)

In general

(B)

Termination

(i)

By the Secretary

(ii)

By a manufacturer

A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—

(I)

if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and

(II)

if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year.

(iii)

Effectiveness of termination

(iv)

Notice to third party

(c)

Duties described and special rule for supplemental benefits

(1)

Duties described

The duties described in this subsection are the following:

(A)

Administration of program

Administering the program, including—

(i)

the determination of the amount of the discounted price of an applicable drug of a manufacturer;

(ii)

except as provided in clause (iii), the establishment of procedures under which discounted prices are provided to applicable beneficiaries at pharmacies or by mail order service at the point-of-sale of an applicable drug;

(iii)

in the case where, during the period beginning on January 1, 2011, and ending on December 31, 2011, it is not practicable to provide such discounted prices at the point-of-sale (as described in clause (ii)), the establishment of procedures to provide such discounted prices as soon as practicable after the point-of-sale;

(iv)

the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—

(I)

the negotiated price of the applicable drug; and

(II)

the discounted price of the applicable drug;

(v)

the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as the Secretary may specify;

(vi)

the establishment of procedures to implement the special rule for supplemental benefits under paragraph (2); and

(vii)

providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).

(B)

Monitoring compliance

(i)

In general

(ii)

Notification

(C)

Collection of data from prescription drug plans and MA–PD plans

(2)

Special rule for supplemental benefits

(d)

Administration

(1)

In general

(2)

Limitation

(A)

In general

(B)

Exception

(3)

Contract with third parties

The Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—

(A)

receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;

(B)

receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;

(C)

provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and

(D)

permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.

(4)

Performance requirements

(5)

Implementation

(6)

Administration

(e)

Enforcement

(1)

Audits

(2)

Civil money penalty

(A)

In general

The Secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the Secretary determines is commensurate with the sum of—

(i)

the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and

(ii)

25 percent of such amount.

(B)

Application

(f)

Clarification regarding availability of other covered part D drugs

(g)

Definitions

In this section:

(1)

Applicable beneficiary

The term “applicable beneficiary” means an individual who, on the date of dispensing a covered part D drug—

(A)

is enrolled in a prescription drug plan or an MA–PD plan;

(B)

is not enrolled in a qualified retiree prescription drug plan;

(C)

is not entitled to an income-related subsidy under section 1395w–114(a) of this title; and

(D)

who—

(i)

has reached or exceeded the initial coverage limit under section 1395w–102(b)(3) of this title during the year; and

(ii)

has not incurred costs for covered part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B) of this title.

(2)

Applicable drug

The term “applicable drug” means, with respect to an applicable beneficiary, a covered part D drug—

(A)

approved under a new drug application under section 355(b) of title 21 or, in the case of a biologic product, licensed under section 262 of this title (other than, with respect to a plan year before 2019, a product licensed under subsection (k) of such section 262); and

(B)

(i)

if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;

(ii)

if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or

(iii)

is provided through an exception or appeal.

(3)

Applicable number of calendar days

The term “applicable number of calendar days” means—

(A)

with respect to claims for reimbursement submitted electronically, 14 days; and

(B)

with respect to claims for reimbursement submitted otherwise, 30 days.

(4)

Discounted price

(A)

In general

(B)

Clarification

(C)

Special case for certain claims

(5)

Manufacturer

(6)

Negotiated price

(7)

Qualified retiree prescription drug plan

(h)

Sunset of program

(1)

In general

(2)

Continued application for applicable drugs dispensed prior to sunset

(Aug. 14, 1935, ch. 531, title XVIII, § 1860D–14A, as added Pub. L. 111–148, title III, § 3301(b), Mar. 23, 2010, 124 Stat. 462; amended Pub. L. 111–152, title I, § 1101(b)(2), Mar. 30, 2010, 124 Stat. 1037; Pub. L. 115–123, div. E, title XII, §§ 53113, 53116(b), Feb. 9, 2018, 132 Stat. 305, 307; Pub. L. 117–169, title I, § 11201(c)(2), Aug. 16, 2022, 136 Stat. 1888.)

cite as: 42 USC 1395w-114a

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