average manufacturer price

(1) Average manufacturer price (A) In general Subject to subparagraph (B), the term “average manufacturer price” means, with respect to a covered outpatient drug of a manufacturer for a rebate period, the average price paid to the manufacturer for the drug in the United States by— (i) wholesalers for drugs distributed to retail community pharmacies; and (ii) retail community pharmacies that purchase drugs directly from the manufacturer. (B) Exclusion of customary prompt pay discounts and other payments (i) In general The average manufacturer price for a covered outpatient drug shall exclude— (I) customary prompt pay discounts extended to wholesalers; (II) bona fide service fees paid by manufacturers to wholesalers or retail community pharmacies, including (but not limited to) distribution service fees, inventory management fees, product stocking allowances, and fees associated with administrative services agreements and patient care programs (such as medication compliance programs and patient education programs); (III) reimbursement by manufacturers for recalled, damaged, expired, or otherwise unsalable returned goods, including (but not limited to) reimbursement for the cost of the goods and any reimbursement of costs associated with return goods handling and processing, reverse logistics, and drug destruction; (IV) payments received from, and rebates or discounts provided to, pharmacy benefit managers, managed care organizations, health maintenance organizations, insurers, hospitals, clinics, mail order pharmacies, long term care providers, manufacturers, or any other entity that does not conduct business as a wholesaler or a retail community pharmacy, unless the drug is an inhalation, infusion, instilled, implanted, or injectable drug that is not generally dispensed through a retail community pharmacy; and (V) discounts provided by manufacturers under section 1395w–114a of this title . (ii) Inclusion of other discounts and payments Notwithstanding clause (i), any other discounts, rebates, payments, or other financial transactions that are received by, paid by, or passed through to, retail community pharmacies shall be included in the average manufacturer price for a covered outpatient drug. (C) Exclusion of section 505(c) drugs In the case of a manufacturer that approves, allows, or otherwise permits any drug of the manufacturer to be sold under the manufacturer’s new drug application approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act [ 21 U.S.C. 355(c) ], such term shall be exclusive of the average price paid for such drug by wholesalers for drugs distributed to retail community pharmacies.


42 USC § 1396r-8(k)(1)

Scoping language

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