Covered outpatient drug
Covered outpatient drug (COD) means, of those drugs which are treated as a prescribed drug for the purposes of section 1905(a)(12) of the Act, a drug which may be dispensed only upon a prescription (except as provided in paragraphs (2) and (3) of this definition). (1) A drug can only be considered a covered outpatient drug if it: (i) Is approved for safety and effectiveness as a prescription drug by the FDA under section 505 or 507 of the FFDCA or under section 505(j) of the FFDCA; (ii) Was commercially used or sold in the United States before the enactment of the Drug Amendments of 1962 or which is identical, similar, or related (within the meaning described in FDA regulations at 21 CFR 310.6(b)(1)) to such a drug, and which has not been the subject of a final determination by the Secretary that it is a new drug (within the meaning of section 201(p) of the FFDCA) or an action brought by the Secretary under sections 301, 302(a), or 304(a) of FFDCA to enforce section 502(f) or 505(a) of the FFDCA; (iii) Is described in section 107(c)(3) of the Drug Amendments of 1962 and for which the Secretary has determined there is a compelling justification for its medical need or is identical, similar, or related (within the meaning described in FDA regulations at 21 CFR 310.6(b)(1)) to such a drug or for which the Secretary has not issued a notice for an opportunity for a hearing under section 505(e) of the FFDCA on a proposed order of the Secretary to withdraw approval of an application for such drug under section 505(e) of the FFDCA because the Secretary has determined that the drug is less than effective for some or all conditions of use prescribed, recommended, or suggested in its labeling; (iv) Is a biological product other than a vaccine that may only be dispensed upon a prescription and is licensed under section 351 of the Public Health Service Act (PHSA) and is produced at an establishment licensed under section 351 of the PHSA to produce such product; or (v) Is insulin certified under section 506 of the FFDCA. (2) A covered outpatient drug does not include any drug, biological product, or insulin provided as part of or incident to and in the same setting as any of the services in paragraphs (2)(i) through (viii) of this definition (and for which payment may be made as part of payment for that service and not as direct reimbursement for the drug, as described in paragraph (4) of this definition). (i) Inpatient Services; (ii) Hospice Services; (iii) Dental Services, except that drugs for which the State plan authorizes direct reimbursement to the dispensing dentist are covered outpatient drugs; (iv) Physician services; (v) Outpatient hospital services; (vi) Nursing facility and services provided by an intermediate care facility for individuals with intellectual disabilities; (vii) Other laboratory and x-ray services; or (viii) Renal dialysis. (3) A covered outpatient drug does not include: (i) Any drug product, prescription or over-the-counter (OTC), for which an NDC number is not required by the FDA; (ii) Any drug product for which a manufacturer has not submitted to CMS evidence to demonstrate that the drug product satisfies the criteria in paragraph (1) of this definition; (iii) Any drug product or biological used for a medical indication which is not a medically accepted indication; or (iv) Over-the-counter products that are not drugs. (4) Direct reimbursement for a drug may include both: (i) Reimbursement for a drug alone, or (ii) Reimbursement for a drug plus the service, in a single inclusive payment if: (A) The drug, charge for the drug, and number of units of the drug are separately identified on the claim, and; (B) The inclusive payment includes an amount directly attributable to the drug, and, (C) The amount paid that is attributable to the drug is based on a reimbursement methodology that is included in the applicable section of the State plan.