The requirements of the line extension provision of the final rule are effective as of the effective date of the final rule (April 1, 2016).
Effective April 1, 2016, each quarter, the labeler of the line extension drug should determine the initial brand name listed drug for its line extension drug taking into consideration which active initial drug has the highest additional rebate ratio for that quarter. Additionally, the labeler of the line extension drug needs to ensure that the NDC of the initial drug with the highest additional rebate ratio is updated in the Drug Data Reporting for Medicaid (DDR) system, as appropriate, each quarter.
The statutory line extension provisions went into effect on January 1, 2010. It is the manufacturers' responsibility to identify their line extension drugs, calculate rebates, and pay the states consistent with the statute as of this effective date, regardless of the approval date of the drugs.
Even though there were specific examples of bona find service fees provided in statute, the four-part test remains the definitive test to qualify a payment as a bona fide service fee. Therefore, manufacturers are responsible for meeting all four parts of the definition of bona fide service fee before a fee can qualify as a bona fide service fee (see 81 FR 5177-5178).
Regulations at 42 CFR 447.506(c) indicate that a primary manufacturer holding the NDA must include the best price of an authorized generic drug in its computation of best price for a single source or an innovator multiple source drug during a rebate period to any manufacturer, wholesaler, retailer, provider, HMO, non-profit entity, or governmental entity in the United States, only when such drugs are being sold by the manufacturer holding the NDA.
Section 1927(k)(1)(C) of the Act requires that in the case of a manufacturer that approves, allows, or otherwise permits any drug of the manufacturer to be sold under a new drug application (NDA) approved under section 505(c) of Federal Food, Drug and Cosmetic Act (FFDCA), AMP shall be inclusive of the average price paid for such drug by wholesalers for drugs distributed to retail community pharmacies.
Yes, to the extent they meet the requirements defined in the final regulation at 42 CFR 447.508(a)(4) and (5). This section of the regulation provides that nominal price sales to entities would be excluded from best price when purchased by an entity that is:
As discussed in the final rule, any prices provided by manufacturers to 340B covered entities are excluded from AMP and best price. This would include inpatient manufacturer prices provided to children's hospitals, critical access hospitals, rural referral centers, sole community hospitals, and freestanding cancer hospitals, where those entities qualify as 340B entities as described in regulation (see 81 FR 5253, 5257-5258).
The lowest price available means it is the lowest price available to the best price eligible entity. The best price must include applicable discounts, rebates, or other transactions that adjust prices either directly or indirectly to the best price eligible entities. See 42 CFR 447.505(b) and section 1927(c) of the Act.
We have provided the following example:
CMS does not require that two separate NDC-9s be blended, however, the agency believes that in certain circumstances, a manufacturer may blend the AMPs of two NDC-9. For example, if a manufacturer acquires a product from a different labeler and has made necessary arrangements with the prior manufacturer, it may have product with the old labeler code (ex. 12345) as well as product from its own labeler code (ex. 67890) in the market at the same time while the supply of the drug under the old labeler code is depleted.
