§1395w–114a Medicare Coverage Gap Discount Program

Summary

Creates a Medicare program that must be running by January 1, 2011, in which the Health and Human Services Secretary makes agreements with drug makers so certain Medicare patients get discounts on some brand drugs when they buy them. The Secretary must make a model agreement within 180 days after March 23, 2010, and let people comment on it. Drug makers in the program must give the discounted price at the time the patient buys the drug at a pharmacy or by mail, except if it was not practical in 2011 — then the discount must be given as soon as possible after sale. For 2011, a drug maker must sign the deal within 30 days after the model agreement is ready. For 2012 and later years, a maker must sign or renew by January 30 before the plan year. Agreements last at least 18 months and then renew automatically for at least one year unless ended. The Secretary can end an agreement for a knowing and willful break of the rules, with at least 30 days’ notice and a chance for a hearing before it becomes final. A maker can end its agreement for any reason; the law sets when that ending takes effect depending on whether it happens before or after January 30. Ending does not erase discounts already owed. The Secretary runs the program and hires one or more contractors to handle information and money. The contractors must pass messages between the Secretary, makers, plans, and others; accept and forward manufacturers’ funds to meet discount obligations; give timely data to makers; and allow makers to audit the data used to calculate discounts. Makers must keep data to prove they followed the rules and must follow procedures set by the Secretary or contractor. Pharmacies or mail services must be reimbursed for the difference between the negotiated price and the discounted price within 14 days for electronic claims and 30 days for paper claims. If a Medicare member has extra drug benefits provided inside their drug plan, those benefits apply first and then the discount is given. The program allows audits of makers and fines equal to the unpaid discount plus 25 percent for each failure. Key definitions in one line: applicable beneficiary = a person in a Part D or MA–PD plan who is not in a qualified retiree plan or income-related subsidy and who has hit the initial coverage limit but not the out‑of‑pocket threshold; applicable drug = certain brand drugs or biologics that are covered by the patient’s plan or approved by exception; discounted price = 50% of the negotiated price (30% for plan years after 2018); applicable number of days = 14 days electronic, 30 days other. The program stops applying to drugs given on or after January 1, 2025, but the rules still apply to drugs dispensed before that date.