The Secretary shall enter into an agreement with each manufacturer of covered outpatient drugs under which the amount required to be paid (taking into account any rebate or discount, as provided by the Secretary) to the manufacturer for covered outpatient drugs (other than drugs described in paragraph (3)) purchased by a covered entity on or after the first day of the first month that begins after
For purposes of subparagraph (A), in the case of over the counter drugs, the “rebate percentage” shall be determined as if the rebate required under section 1927(c) of the Social Security Act [42 U.S.C. 1396r–8(c)] is based on the applicable percentage provided under section 1927(c)(3) of such Act.
The term “over the counter drug” means a drug that may be sold without a prescription and which is prescribed by a physician (or other persons authorized to prescribe such drug under State law).
Drugs described in this paragraph are drugs purchased by the entity for which payment is made by the State under the State plan for medical assistance under title XIX of the Social Security Act [42 U.S.C. 1396 et seq.].
A covered entity shall not request payment under title XIX of the Social Security Act [42 U.S.C. 1396 et seq.] for medical assistance described in section 1905(a)(12) of such Act [42 U.S.C. 1396d(a)(12)] with respect to a drug that is subject to an agreement under this section if the drug is subject to the payment of a rebate to the State under section 1927 of such Act [42 U.S.C. 1396r–8].
The Secretary shall establish a mechanism to ensure that covered entities comply with clause (i). If the Secretary does not establish a mechanism within 12 months under the previous sentence, the requirements of section 1927(a)(5)(C) of the Social Security Act [42 U.S.C. 1396r–8(a)(5)(C)] shall apply.
With respect to any covered outpatient drug that is subject to an agreement under this subsection, a covered entity shall not resell or otherwise transfer the drug to a person who is not a patient of the entity.
A covered entity shall permit the Secretary and the manufacturer of a covered outpatient drug that is subject to an agreement under this subsection with the entity (acting in accordance with procedures established by the Secretary relating to the number, duration, and scope of audits) to audit at the Secretary’s or the manufacturer’s expense the records of the entity that directly pertain to the entity’s compliance with the requirements described in subparagraphs 2
If the Secretary finds, after audit as described in subparagraph (C) and after notice and hearing, that a covered entity is in violation of a requirement described in subparagraphs 2 (A) or (B), the covered entity shall be liable to the manufacturer of the covered outpatient drug that is the subject of the violation in an amount equal to the reduction in the price of the drug (as described in subparagraph (A)) provided under the agreement between the entity and the manufacturer under this paragraph.
In the case of a covered entity that is a distinct part of a hospital, the hospital shall not be considered a covered entity under this paragraph unless the hospital is otherwise a covered entity under this subsection.
Not later than 60 days after
The process developed under subparagraph (A) shall include a requirement that an entity applying for certification under this paragraph submit information to the Secretary concerning the amount such entity expended for covered outpatient drugs in the preceding year so as to assist the Secretary in evaluating the validity of the entity’s subsequent purchases of covered outpatient drugs at discounted prices.
The Secretary shall make available to all manufacturers of covered outpatient drugs a description of the criteria for certification under this paragraph.
The certification process developed by the Secretary under subparagraph (A) shall include procedures under which each State shall, not later than 30 days after the submission of the descriptions under subparagraph (C), prepare and submit a report to the Secretary that contains a list of entities described in subparagraphs (J) and (K) of paragraph (4) that are located in the State.
The Secretary shall require the recertification of entities certified pursuant to this paragraph on a not more frequent than annual basis, and shall require that such entities submit information to the Secretary to permit the Secretary to evaluate the validity of subsequent purchases by such entities in the same manner as that required under subparagraph (B).
The Secretary shall establish a prime vendor program under which covered entities may enter into contracts with prime vendors for the distribution of covered outpatient drugs. If a covered entity obtains drugs directly from a manufacturer, the manufacturer shall be responsible for the costs of distribution.
The Secretary shall notify manufacturers of covered outpatient drugs and single State agencies under section 1902(a)(5) of the Social Security Act [42 U.S.C. 1396a(a)(5)] of the identities of covered entities under this paragraph, and of entities that no longer meet the requirements of paragraph (5) or that are no longer certified pursuant to paragraph (7).
Nothing in this subsection shall prohibit a manufacturer from charging a price for a drug that is lower than the maximum price that may be charged under paragraph (1).
In this section, the terms “average manufacturer price”, “covered outpatient drug”, and “manufacturer” have the meaning given such terms in section 1927(k) of the Social Security Act [42 U.S.C. 1396r–8(k)].
From amounts appropriated under paragraph (4), the Secretary shall provide for improvements in compliance by manufacturers with the requirements of this section in order to prevent overcharges and other violations of the discounted pricing requirements specified in this section.
From amounts appropriated under paragraph (4), the Secretary shall provide for improvements in compliance by covered entities with the requirements of this section in order to prevent diversion and violations of the duplicate discount provision and other requirements specified under subsection (a)(5).
Not later than 180 days after
The administrative resolution of a claim or claims under the regulations promulgated under subparagraph (A) shall be a final agency decision and shall be binding upon the parties involved, unless invalidated by an order of a court of competent jurisdiction.
There are authorized to be appropriated to carry out this subsection, such sums as may be necessary for fiscal year 2010 and each succeeding fiscal year.
For covered entities described in subparagraph (M) (other than a children’s hospital described in subparagraph (M)), (N), or (O) of subsection (a)(4), the term “covered outpatient drug” shall not include a drug designated by the Secretary under section 360bb of title 21 for a rare disease or condition.
The Social Security Act, referred to in subsec. (a)(1), (3), (4)(L)(i), (5)(A)(i), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, which is classified generally to chapter 7 (§ 301 et seq.) of this title. Titles XVIII and XIX of the Act are classified generally to subchapters XVIII (§ 1395 et seq.) and XIX (§ 1396 et seq.) of chapter 7 of this title, respectively. For complete classification of this Act to the Code, see section 1305 of this title and Tables.
Section 256a of this title, referred to in subsec. (a)(4)(B), was in the original a reference to section 340A of act
Subpart II of part C of subchapter XXIV, referred to in subsec. (a)(4)(D), was redesignated subpart I of part C of subchapter XXIV of this chapter by Pub. L. 106–345, title III, § 301(b)(1),
The Native Hawaiian Health Care Act of 1988, referred to in subsec. (a)(4)(H), was Pub. L. 100–579,
The Indian Health Care Improvement Act, referred to in subsec. (a)(4)(I), is Pub. L. 94–437,
Section 247b(j)(2) of this title, referred to in subsec. (a)(4)(K), was repealed and section 247b(j)(1)(B) was redesignated section 247b(j)(2) by Pub. L. 103–183, title III, § 301(b)(1)(A), (C),
The Prescription Drug Marketing Act, referred to in subsec. (d)(2)(B)(v)(III), probably means the Prescription Drug Marketing Act of 1987, Pub. L. 100–293,
Another section 340B of act
2010—Subsec. (a)(1). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drug” for “covered drug” and “covered outpatient drugs” for “covered drugs” wherever appearing.
Pub. L. 111–148, § 7102(b)(1), inserted at end “Each such agreement shall require that the manufacturer furnish the Secretary with reports, on a quarterly basis, of the price for each covered drug subject to the agreement that, according to the manufacturer, represents the maximum price that covered entities may permissibly be required to pay for the drug (referred to in this section as the ‘ceiling price’), and shall require that the manufacturer offer each covered entity covered drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.”
Subsec. (a)(2)(A). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drug” for “covered drug” in introductory provisions.
Pub. L. 111–148, § 7101(b)(1), substituted “covered drug” for “covered outpatient drug” in introductory provisions.
Subsec. (a)(2)(B)(i). Pub. L. 111–148, § 2501(f)(1)(A), substituted “1927(c)(3)” for “1927(c)(4)”.
Subsec. (a)(4)(L). Pub. L. 111–152, § 2302(1)(B), struck out “and” at end of cl. (i), substituted “; and” for period at end of cl. (ii), and added cl. (iii).
Pub. L. 111–148, § 7101(c)(1), in cl. (i), inserted “and” at end, in cl. (ii), substituted period for “; and” at end, and struck out cl. (iii) which read as follows: “does not obtain covered outpatient drugs through a group purchasing organization or other group purchasing arrangement.”
Subsec. (a)(4)(M) to (O). Pub. L. 111–148, § 7101(a), added subpars. (M) to (O).
Subsec. (a)(5)(B). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drug” for “covered drug”.
Pub. L. 111–148, § 7101(b)(1), substituted “covered drug” for “covered outpatient drug”.
Subsec. (a)(5)(C). Pub. L. 111–152, § 2302(1)(C)(i), (ii), redesignated subpar. (D) as (C) and struck out former subpar. (C). Prior to amendment, text of subpar. (C) read as follows:
“(i)
“(ii)
“(iii)
“(I) with respect to a covered outpatient drug that is unavailable to be purchased through the program under this section due to a drug shortage problem, manufacturer noncompliance, or any other circumstance beyond the hospital’s control;
“(II) to facilitate generic substitution when a generic covered outpatient drug is available at a lower price; or
“(III) to reduce in other ways the administrative burdens of managing both inventories of drugs subject to this section and inventories of drugs that are not subject to this section, so long as the exceptions do not create a duplicate discount problem in violation of subparagraph (A) or a diversion problem in violation of subparagraph (B).
“(iv)
Pub. L. 111–148, § 7101(c)(2)(B), added subpar. (C). Former subpar. (C) redesignated (D).
Pub. L. 111–148, § 7101(b)(1), substituted “covered drug” for “covered outpatient drug”.
Subsec. (a)(5)(C)(iv). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drugs” for “covered drugs”.
Subsec. (a)(5)(D). Pub. L. 111–152, § 2302(1)(C)(ii), (iii), redesignated subpar. (E) as (D) and substituted “subparagraph (C)” for “subparagraph (D)”. Former subpar. (D) redesignated (C).
Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drug” for “covered drug”.
Pub. L. 111–148, § 7101(c)(2)(A), redesignated subpar. (C) as (D). Former subpar. (D) redesignated (E).
Pub. L. 111–148, § 7101(b)(1), substituted “covered drug” for “covered outpatient drug”.
Subsec. (a)(5)(E). Pub. L. 111–152, § 2302(1)(C)(ii), redesignated subpar. (E) as (D).
Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drug” for “covered drug”.
Pub. L. 111–148, §§ 7101(c)(2)(A), 7102(b)(2), redesignated subpar. (D) as (E) and inserted “after audit as described in subparagraph (D) and” after “finds,”.
Subsec. (a)(7). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drugs” for “covered drugs” wherever appearing.
Pub. L. 111–148, § 7101(b)(1), substituted “covered drugs” for “covered outpatient drugs” wherever appearing.
Subsec. (a)(9). Pub. L. 111–152, § 2302(1)(A), substituted “covered outpatient drugs” for “covered drugs”.
Pub. L. 111–148, § 7101(b)(1), substituted “covered drugs” for “covered outpatient drugs”.
Subsec. (b). Pub. L. 111–148, § 7101(b)(2)(A), which directed substitution of “Other definitions” for “Other definition” in subsec. heading, designation of existing provisions as par. (1), and insertion of par. (1) heading, was executed by reenacting subsec. heading without change, designating existing provisions as par. (1), and inserting par. (1) heading, to reflect the probable intent of Congress.
Subsec. (b)(2). Pub. L. 111–148, § 7101(b)(2)(B), added par. (2).
Subsec. (c). Pub. L. 111–152, § 2302(2), struck out subsec. (c). Text read as follows: “Not later than 90 days after the date of filing of the hospital’s most recently filed Medicare cost report, the hospital shall issue a credit as determined by the Secretary to the State Medicaid program for inpatient covered drugs provided to Medicaid recipients.”
Pub. L. 111–148, § 7101(d), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: “A manufacturer is deemed to meet the requirements of subsection (a) of this section if the manufacturer establishes to the satisfaction of the Secretary that the manufacturer would comply (and has offered to comply) with the provisions of this section (as in effect immediately after
Pub. L. 111–148, § 2501(f)(1)(B), (C), redesignated subsec. (d) as (c) and struck out former subsec. (c). Text of former subsec. (c) read as follows: “Any reference in this section to a provision of the Social Security Act shall be deemed to be a reference to the provision as in effect on
Subsec. (d). Pub. L. 111–152, § 2302(3), substituted “covered outpatient drugs” for “covered drugs” wherever appearing and substituted “(a)(5)(C)” for “(a)(5)(D)” and “(a)(5)(D)” for “(a)(5)(E)” in two places.
Pub. L. 111–148, § 7102(a), which directed general amendment of subsec. (d), was executed by adding subsec. (d) after subsec. (c) to reflect the probable intent of Congress, because no subsec. (d) appeared subsequent to amendment by Pub. L. 111–148, § 2501(f)(1)(C). See below.
Pub. L. 111–148, § 2501(f)(1)(C), redesignated subsec. (d) as (c).
Subsec. (e). Pub. L. 111–309 substituted “covered entities described in subparagraph (M) (other than a children’s hospital described in subparagraph (M))” for “covered entities described in subparagraph (M)”.
Pub. L. 111–152, § 2302(4), added subsec. (e).
1993—Pub. L. 103–43 made technical amendment to directory language of Pub. L. 102–585, § 602(a), which enacted this section.
Pub. L. 111–309, title II, § 204(a)(2),
Pub. L. 111–148, title II, § 2501(f)(2),
Pub. L. 111–148, title VII, § 7101(e),
Pub. L. 116–136, div. A, title III, § 3202,
Pub. L. 102–585, title VI, § 602(b),