Unit Rebate Amount Calculation Example for Line Extension S or I Drugs

Step 1: Calculate Standard Rebate (Basic Rebate Amount + Additional Rebate Amount)

  • Product “Y” baseline average manufacturer price (AMP) (line extension) = 100.00
  • Product “Y” quarterly AMP (QAMP) (line extension) = 300.00
  • Product “Y” best price (line extension) = 250.00
  • Product “Y” baseline consumer price index for all urgan consumes (CPI–U) = 170.00
  • Product “Y” CPI–U = 200.00

Basic Rebate Amount = the greater of QAMP x 23.1% or QAMP – BP

Basic Rebate Calculation (AMP x Ratio)

  • QAMP x 23.1% = 300.00 x 0.231 = 69.3
    QAMP Ratio Basic Rebate Amount
    300.00 0.231 69.3000000 (Rounded to 7 Places)

Basic Rebate Calculation (AMP - BP)

  • QAMP – BP = 300.00 - 250.00 = 50.00
    QAMP Ratio Basic Rebate Amount
    300.00 250.00 50.0000000 (Rounded to 7 Places)

Basic Rebate Amount = 69.3000000 (the greater of the two results)

  • The greater of the two results (69.3000000 and 50.0000000) is 69.3000000

Additional Rebate = AMP – [(Baseline AMP / Baseline CPI-U) x Quarterly CPI-U]

Additional Rebate Calculation (Base AMP/Base CPI-U) * Quarterly CPI-U)

  • Baseline AMP / Baseline CPI-U = (100.00 / 170.00) x 200.00 = 117.64705882
    Base AMP Base CPI-U Quarterly CPI-U Additonal Rebate Amount
    100.00 170.00 200.00 117.6470588 (Rounded to 7 places)

Compare Additional Rebate Amount to QAMP

  • Compare the additional rebate amount to the quarterly AMP. If the resulting amount is less than the quarterly AMP, then subtract the resulting amount from the quarterly AMP to arrive at the additional rebate amount. If the resulting amount is equal to or greater than the quarter’s AMP, then the additional rebate amount is equal to zero.
    Additional Rebate Amount QAMP
    117.6470588 300.00

300.00 is greater than 117.6470588, therefore Additional URA = 182.3529412

Total Rebate Calculation = Basic Rebate Amount (Rounded to 7 Places) + Additional Rebate Amount (Rounded to 7 Places)

Basic Rebate + Additional Rebate = 69.3000000 + 182.3529412 = 251.6529412

  • 3.A Basic Rebate + Additional Rebate, Rounded to 7 Places 251.6529412
  • 3.B Basic Rebate + Additional Rebate, Rounded to 6 Places 251.652941
  • 3.C Total Rebate Amount, Rounded to 4 Places 251.6529

Standard Rebate Amount for the Line Extension Drug = 251.6529

Step 2: Calculate Alternative Rebate

  • Product “Y” AMP (line extension) = 300.00
  • Product “Z” AMP (initial brand name listed drug) strength A = 280.00
  • Product “Z” AMP (initial brand name listed drug) strength B = 275.00
  • Product “Z” AMP (initial brand name listed drug) strength C = 270.00
  • Product “Z” Additional Rebate Amount (initial brand name listed drug) strength A = 200.0000000
  • Product “Z” Additional Rebate Amount (initial brand name listed drug) strength B = 125.0000000
  • Product “Z” Additional Rebate Amount (initial brand name listed drug) strength C = 110.0000000

Calculate the Additional Rebate Amount Ratio for Each Potential Initial Drug (Additional rebate amount / QAMP)

Potential ID Additional Rebate Amount QAMP Additional Rebate Amount Ratio (Rounded to 7 Places)
Strength A 200.0000000 280.00 0.7143000
Strength B 125.0000000 275.00 0.4545000
Strength C 110.0000000 270.00 0.4074000

Select the Initial Drug with the Highest Additional Rebate Amount Ratio = 0.7143000 (Strength A)

Calculate the Alternative URA (Line Extension Quarterly AMP x Highest Additional Rebate Ratio)

Alternative URA = 300.00 x0.7143 = 214.2900000 (rounded to 7 places)
  • 3.A Alternative URA, Rounded to 6 Places 214.2900000
  • 3.B Alternative URA, Rounded to 4 Places 214.2900

Step 3: Calculate the Total Rebate for Line Extension S or I Drugs

Determine the Line Extension Drug’s URA

The line extension drug’s URA = the greater of the standard URA or the alternative URA

Standard URA Alternative URA Line Extension Drug's URA
251.6529 214.2900 251.6529 (Standard URA)

Comparison of URA to Quarterly AMP

If the calculated URA is greater than quarterly AMP, it is reduced to equal AMP.

URA Quarterly AMP Final URA
251.6529 300.00 251.6529