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# Unit Rebate Amount Calculation for Single Source or Innovator Multiple Source Drugs

## Definition of Baseline Average Manufacturer Price and Baseline CPI-U

A drug’s baseline Average Manufacturer Price (AMP) and baseline Consumer Price Index for all Urban Users (CPI-U) values vary depending upon the drug’s market date. The current definitions for both the baseline AMP and the baseline CPI-U follow:

baseline AMP* – The AMP for the first quarter after the drug’s market date.

baseline CPI-U* – The CPI-U for the month prior to the first quarter after the drug’s market date.

* Please note that this methodology is applied to drugs with market dates of October 1, 1993 or greater.

## Definition of Quarterly CPI-U

The quarterly CPI-U is equal to the CPI-U value of the month prior to the quarter being calculated.

## Unit Rebate Amount Calculation Example for “S” or “I” Drugs (That Are Not Clotting Factor (CF) or Exclusively Pediatric (EP) Drugs)

Product “X” baseline AMP = 0.277450

Product “X” quarterly AMP = 0.311824

Product “X” quarterly BP = 0.267440

Product “X” baseline CPI-U = 151.6

Quarter “X” quarterly CPI-U = 175.0

### Step 1: Basic Rebate Calculation

• The basic rebate amount for Single Source or Innovation (S/I) drugs is the greater of AMP minus BP or AMP times 23.1%
• The basic rebate amount for S/I drugs with an EP indicator is the greater of AMP minus BP or AMP times 17.1%
• The basic rebate amount for S/I drugs with a CF indicator is the greater of AMP minus BP or AMP times 17.1%

Formula: Basic Rebate Amount = the greater of the Quarterly AMP x 23.1% or the Quarterly AMP – the Quarterly BP

• Quarterly AMP x 23.1% = 0.311824 x 0.231 = 0.0720313440
• This value is rounded to 7 places = 0.0720313
• Quarterly AMP – Quarterly BP = 0.311824 - 0.267440 = 0.044384000
• This value is rounded to 7 places = 0.0443840
• The greater of the two results (i.e., 0.0720313 and 0.0443840) is 0.0720313; therefore, the Basic Rebate Amount equal 0.0720313

### Step 2: Additional Rebate Calculation

Formula: (Baseline AMP / Baseline CPI-U) x Quarterly CPI-U

• Baseline AMP / Baseline CPI-U = (0.277450 / 151.6) x 175 = 0.3202675396
• This amount is rounded to 7 places = 0.3202754
• Compare the additional rebate amount (0.3202754) to the quarterly AMP (0.311824): if the number is less than the quarterly AMP, subtract it from the quarterly AMP to determine the additional rebate amount; if the number is equal to or greater than the quarter’s AMP, the additional rebate amount is equal to zero.
• In this example, 0.3202754 is greater than 0.311824; therefore, the Additional URA = 0.000000

### Step 3: Total Rebate Calculation

Formula: total rebate amount = Basic Rebate Amount (Rounded to 7 Places) + Additional Rebate Amount (Rounded to 7 Places)

• Basic Rebate + Additional Rebate = 0.0720313 + 0.000000 = 0.0720313
• This amount is rounded to 6 places = 0.072031
• This amount is rounded to 4 places = 0.0720
• Total Rebate Amount = 0.0720

### Step 4: Comparison of Total Rebate Amount to Quarterly AMP

• If the total rebate amount is greater than the quarterly AMP, it is reduced to equal AMP.
• Total Rebate Amount = 0.0720
• Quarterly AMP = 0.311824
• Since the quarterly AMP is greater than the total rebate amount, the total rebate amount does not change.