42 U.S. Code § 1395w–3a - Use of average sales price payment methodology
(a)
Application
(2)
Election
This section shall not apply in the case of a physician who elects under subsection (a)(1)(A)(ii) ofsection
1395w–3b of this title for that section to apply instead of this section for the payment for drugs and biologicals.
(b)
Payment amount
(1)
In general
Subject to paragraph (7) and subsections (d)(3)(C) and (e) of this section, the amount of payment determined under this section for the billing and payment code for a drug or biological (based on a minimum dosage unit) is, subject to applicable deductible and coinsurance—
(A)
in the case of a multiple source drug (as defined in subsection (c)(6)(C) of this section), 106 percent of the amount determined under paragraph (3) for a multiple source drug furnished before April 1, 2008, or 106 percent of the amount determined under paragraph (6) for a multiple source drug furnished on or after April 1, 2008;
(2)
Specification of unit
(A)
Specification by manufacturer
The manufacturer of a drug or biological shall specify the unit associated with each National Drug Code (including package size) as part of the submission of data under section
1396r–8
(b)(3)(A)(iii) of this title.
(B)
Unit defined
In this section, the term “unit” means, with respect to each National Drug Code (including package size) associated with a drug or biological, the lowest identifiable quantity (such as a capsule or tablet, milligram of molecules, or grams) of the drug or biological that is dispensed, exclusive of any diluent without reference to volume measures pertaining to liquids. For years after 2004, the Secretary may establish the unit for a manufacturer to report and methods for counting units as the Secretary determines appropriate to implement this section.
(3)
Multiple source drug
For all drug products included within the same multiple source drug billing and payment code, the amount specified in this paragraph is the volume-weighted average of the average sales prices reported under section
1396r–8
(b)(3)(A)(iii) of this title determined by—
(4)
Single source drug or biological
The amount specified in this paragraph for a single source drug or biological is the lesser of the following:
(A)
Average sales price
The average sales price as determined using the methodology applied under paragraph (3) for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008, for all National Drug Codes assigned to such drug or biological product.
(B)
Wholesale acquisition cost (WAC)
The wholesale acquisition cost (as defined in subsection (c)(6)(B) of this section) using the methodology applied under paragraph (3) for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008, for all National Drug Codes assigned to such drug or biological product.
(5)
Basis for payment amount
The payment amount shall be determined under this subsection based on information reported under subsection (f) of this section and without regard to any special packaging, labeling, or identifiers on the dosage form or product or package.
(6)
Use of volume-weighted average sales prices in calculation of average sales price
(A)
In general
For all drug products included within the same multiple source drug billing and payment code, the amount specified in this paragraph is the volume-weighted average of the average sales prices reported under section
1396r–8
(b)(3)(A)(iii) of this title determined by—
(i)
computing the sum of the products (for each National Drug Code assigned to such drug products) of—
(7)
Special rule
Beginning with April 1, 2008, the payment amount for—
(A)
each single source drug or biological described in section
1395u
(o)(1)(G) of this title that is treated as a multiple source drug because of the application of subsection (c)(6)(C)(ii) is the lower of—
(B)
a multiple source drug described in section
1395u
(o)(1)(G) of this title (excluding a drug or biological that is treated as a multiple source drug because of the application of such subsection) is the lower of—
(8)
Biosimilar biological product
The amount specified in this paragraph for a biosimilar biological product described in paragraph (1)(C) is the sum of—
(c)
Manufacturer’s average sales price
(1)
In general
For purposes of this section, subject to paragraphs (2) and (3), the manufacturer’s “average sales price” means, of a drug or biological for a National Drug Code for a calendar quarter for a manufacturer for a unit—
(2)
Certain sales exempted from computation
In calculating the manufacturer’s average sales price under this subsection, the following sales shall be excluded:
(A)
Sales exempt from best price
Sales exempt from the inclusion in the determination of “best price” under section
1396r–8
(c)(1)(C)(i) of this title.
(B)
Sales at nominal charge
Such other sales as the Secretary identifies as sales to an entity that are merely nominal in amount (as applied for purposes of section
1396r–8
(c)(1)(C)(ii)(III) of this title, except as the Secretary may otherwise provide).
(3)
Sale price net of discounts
In calculating the manufacturer’s average sales price under this subsection, such price shall include volume discounts, prompt pay discounts, cash discounts, free goods that are contingent on any purchase requirement, chargebacks, and rebates (other than rebates under section
1396r–8 of this title). For years after 2004, the Secretary may include in such price other price concessions, which may be based on recommendations of the Inspector General, that would result in a reduction of the cost to the purchaser.
(4)
Payment methodology in cases where average sales price during first quarter of sales is unavailable
In the case of a drug or biological during an initial period (not to exceed a full calendar quarter) in which data on the prices for sales for the drug or biological is not sufficiently available from the manufacturer to compute an average sales price for the drug or biological, the Secretary may determine the amount payable under this section for the drug or biological based on—
(5)
Frequency of determinations
(A)
In general on a quarterly basis
The manufacturer’s average sales price, for a drug or biological of a manufacturer, shall be calculated by such manufacturer under this subsection on a quarterly basis. In making such calculation insofar as there is a lag in the reporting of the information on rebates and chargebacks under paragraph (3) so that adequate data are not available on a timely basis, the manufacturer shall apply a methodology based on a 12-month rolling average for the manufacturer to estimate costs attributable to rebates and chargebacks. For years after 2004, the Secretary may establish a uniform methodology under this subparagraph to estimate and apply such costs.
(B)
Updates in payment amounts
The payment amounts under subsection (b) of this section shall be updated by the Secretary on a quarterly basis and shall be applied based upon the manufacturer’s average sales price calculated for the most recent calendar quarter for which data is available.
(C)
Use of contractors; implementation
The Secretary may contract with appropriate entities to calculate the payment amount under subsection (b) of this section. Notwithstanding any other provision of law, the Secretary may implement, by program instruction or otherwise, any of the provisions of this section.
(6)
Definitions and other rules
In this section:
(B)
Wholesale acquisition cost
The term “wholesale acquisition cost” means, with respect to a drug or biological, the manufacturer’s list price for the drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data.
(C)
Multiple source drug
(i)
In general
The term “multiple source drug” means, for a calendar quarter, a drug for which there are 2 or more drug products which—
(I)
are rated as therapeutically equivalent (under the Food and Drug Administration’s most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”),
(E)
Exception from pharmaceutical equivalence and bioequivalence requirement
Subparagraph (C)(ii) shall not apply if the Food and Drug Administration changes by regulation the requirement that, for purposes of the publication described in subparagraph (C)(i), in order for drug products to be rated as therapeutically equivalent, they must be pharmaceutically equivalent and bioequivalent, as defined in subparagraph (F).
(F)
Determination of pharmaceutical equivalence and bioequivalence
For purposes of this paragraph—
(H)
Biosimilar biological product
The term “biosimilar biological product” means a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section
262 of this title.
(I)
Reference biological product
The term “reference biological product” means the biological product licensed under such section
262 of this title that is referred to in the application described in subparagraph (H) of the biosimilar biological product.
(d)
Monitoring of market prices
(1)
In general
The Inspector General of the Department of Health and Human Services shall conduct studies, which may include surveys, to determine the widely available market prices of drugs and biologicals to which this section applies, as the Inspector General, in consultation with the Secretary, determines to be appropriate.
(2)
Comparison of prices
Based upon such studies and other data for drugs and biologicals, the Inspector General shall compare the average sales price under this section for drugs and biologicals with—
(3)
Limitation on average sales price
(A)
In general
The Secretary may disregard the average sales price for a drug or biological that exceeds the widely available market price or the average manufacturer price for such drug or biological by the applicable threshold percentage (as defined in subparagraph (B)).
(B)
Applicable threshold percentage defined
In this paragraph, the term “applicable threshold percentage” means—
(C)
Authority to adjust average sales price
If the Inspector General finds that the average sales price for a drug or biological exceeds such widely available market price or average manufacturer price for such drug or biological by the applicable threshold percentage, the Inspector General shall inform the Secretary (at such times as the Secretary may specify to carry out this subparagraph) and the Secretary shall, effective as of the next quarter, substitute for the amount of payment otherwise determined under this section for such drug or biological the lesser of—
(4)
Civil money penalty
(A)
In general
If the Secretary determines that a manufacturer has made a misrepresentation in the reporting of the manufacturer’s average sales price for a drug or biological, the Secretary may apply a civil money penalty in an amount of up to $10,000 for each such price misrepresentation and for each day in which such price misrepresentation was applied.
(5)
Widely available market price
(A)
In general
In this subsection, the term “widely available market price” means the price that a prudent physician or supplier would pay for the drug or biological. In determining such price, the Inspector General shall take into account the discounts, rebates, and other price concessions routinely made available to such prudent physicians or suppliers for such drugs or biologicals.
(e)
Authority to use alternative payment in response to public health emergency
In the case of a public health emergency under section
247d of this title in which there is a documented inability to access drugs and biologicals, and a concomitant increase in the price,
[1]
of a drug or biological which is not reflected in the manufacturer’s average sales price for one or more quarters, the Secretary may use the wholesale acquisition cost (or other reasonable measure of drug or biological price) instead of the manufacturer’s average sales price for such quarters and for subsequent quarters until the price and availability of the drug or biological has stabilized and is substantially reflected in the applicable manufacturer’s average sales price.
(g)
Judicial review
There shall be no administrative or judicial review under section
1395ff of this title, section
1395oo of this title, or otherwise, of—
(1)
determinations of payment amounts under this section, including the assignment of National Drug Codes to billing and payment codes;
(3)
the method to allocate rebates, chargebacks, and other price concessions to a quarter if specified by the Secretary;
[1] So in original. The comma probably should not appear.
Source
(Aug. 14, 1935, ch. 531, title XVIII, § 1847A, as added Pub. L. 108–173, title III, § 303(c)(1),Dec. 8, 2003, 117 Stat. 2239; amended Pub. L. 110–173, title I, § 112,Dec. 29, 2007, 121 Stat. 2500; Pub. L. 111–148, title III, § 3139(a),Mar. 23, 2010, 124 Stat. 439.)
Amendments
2010—Subsec. (b)(1)(C). Pub. L. 111–148, § 3139(a)(1)(A), added subpar. (C).
Subsec. (b)(8). Pub. L. 111–148, § 3139(a)(1)(B), added par. (8).
Subsec. (c)(6)(H), (I). Pub. L. 111–148, § 3139(a)(2), added subpars. (H) and (I).
2007—Subsec. (b)(1). Pub. L. 110–173, § 112(b)(1), inserted “paragraph (7) and” after “Subject to” in introductory provisions.
Subsec. (b)(1)(A). Pub. L. 110–173, § 112(a)(1), inserted “for a multiple source drug furnished before April 1, 2008, or 106 percent of the amount determined under paragraph (6) for a multiple source drug furnished on or after April 1, 2008” after “paragraph (3)”.
Subsec. (b)(4)(A), (B). Pub. L. 110–173, § 112(a)(2), inserted “for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008,” after “paragraph (3)”.
Subsec. (b)(6). Pub. L. 110–173, § 112(a)(3), added par. (6).
Subsec. (b)(7). Pub. L. 110–173, § 112(b)(2), added par. (7).
Effective Date of 2010 Amendment
Pub. L. 111–148, title III, § 3139(b),Mar. 23, 2010, 124 Stat. 440, provided that: “The amendments made by subsection (a) [amending this section] shall apply to payments for biosimilar biological products beginning with the first day of the second calendar quarter after enactment of legislation providing for a biosimilar pathway (as determined by the Secretary [probably means the Secretary of Health and Human Services]).”
Report on Sales to Pharmacy Benefit Managers
Pub. L. 108–173, title III, § 303(c)(2),Dec. 8, 2003, 117 Stat. 2245, provided that:
“(A) Study.—The Secretary [of Health and Human Services] shall conduct a study on sales of drugs and biologicals to large volume purchasers, such as pharmacy benefit managers and health maintenance organizations, for purposes of determining whether the price at which such drugs and biologicals are sold to such purchasers does not represent the price such drugs and biologicals are made available for purchase to prudent physicians.
“(B) Report.—Not later than January 1, 2006, the Secretary shall submit to Congress a report on the study conducted under paragraph (1), and shall include recommendations on whether such sales to large volume purchasers should be excluded from the computation of a manufacturer’s average sales price under section 1847A of the Social Security Act [42 U.S.C. 1395w–3a], as added by paragraph (1).”
Inspector General Report on Adequacy of Reimbursement Rate Under Average Sales Price Methodology
Pub. L. 108–173, title III, § 303(c)(3),Dec. 8, 2003, 117 Stat. 2245, provided that:
“(A) Study.—The Inspector General of the Department of Health and Human Services shall conduct a study on the ability of physician practices in the specialties of hematology, hematology/oncology, and medical oncology of different sizes, especially particularly large practices, to obtain drugs and biologicals for the treatment of cancer patients at 106 percent of the average sales price for the drugs and biologicals. In conducting the study, the Inspector General shall conduct an audit of a representative sample of such practices to determine the adequacy of reimbursement under section 1847A of the Social Security Act [42 U.S.C. 1395w–3a], as added by paragraph (1).
“(B) Report.—Not later October 1, 2005, the Inspector General shall submit to Congress a report on the study conducted under subparagraph (A), and shall include recommendations on the adequacy of reimbursement for such drugs and biologicals under such section
1847A [42 U.S.C. 1395w–3a].”
Application of 2003 Amendment to Physician Specialties
Amendment by section 303 ofPub. L. 108–173, insofar as applicable to payments for drugs or biologicals and drug administration services furnished by physicians, is applicable only to physicians in the specialties of hematology, hematology/oncology, and medical oncology under this subchapter, see section 303(j) ofPub. L. 108–173, set out as a note under section
1395u of this title.
Notwithstanding section 303(j) ofPub. L. 108–173(see note above), amendment by section 303 ofPub. L. 108–173also applicable to payments for drugs or biologicals and drug administration services furnished by physicians in specialties other than the specialties of hematology, hematology/oncology, and medical oncology, see section 304 ofPub. L. 108–173, set out as a note under section
1395u of this title.
LII has no control over and does not endorse any external Internet site that contains links to or references LII.