Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XVIII — HEALTH INSURANCE FOR AGED AND DISABLED › Part B — Supplementary Medical Insurance Benefits for Aged and Disabled › § 1395w–3b
Creates a program where Medicare buys certain outpatient drugs and biologicals by letting companies compete with bids. The Health Secretary must set up categories of drugs, create geographic areas, and start using the program beginning in 2006. Each year, a doctor can choose to get drugs through this program instead of the old system. Doctors who join must pick a contractor each year to supply and bill the drugs. The Secretary can waive some federal buying rules to help competition and can remove a drug from the bidding program if it won’t save money or would hurt patient access. The winning contractors must be able to get and deliver drugs in the area, ship at least 5 days each week, meet quality and financial standards, buy directly from manufacturers or their distributors, follow fraud and conduct rules, and usually deliver only to the selecting doctor. Contracts last 3 years and the Secretary may pick more than one contractor for a category but not fewer than 2. Contractors submit claims and are paid; they collect the patient’s deductible and the coinsurance so Medicare pays 80 percent of the payment amount and the patient pays the rest after meeting the usual Part B deductible. Bids must include delivery and dispensing costs and may be adjusted if acquisition costs change, with cost reports provided at least quarterly. The Secretary sets one payment amount per drug in each area from accepted bids. Many agency choices under the program (payment amounts, contract awards, areas, phase-in, categories, and bidding rules) cannot be reviewed in court or through administrative appeals. The law uses a few defined words: "competitively biddable drugs and biologicals" — drugs covered by this program starting January 1, 2006; "program" — the competitive acquisition program; "competitive acquisition area" or "area" — a geographic region set by the Secretary; "contractor" — an entity that has a contract under the program.
Full Legal Text
The Public Health and Welfare, Source: USLM XML via OLRC
Legislative History
Reference
Citation
42 U.S.C. § 1395w–3b
Title 42, The Public Health and Welfare
Last Updated
Sep 23, 2026
Release point: 119-110