42 U.S.C. § 256b — Limitation on prices of drugs purchased

Page 435 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b 1 So in original. The comma probably should be ‘‘and’’. 2 So in original. Probably should be ‘‘hospital,’’. risk for developmental or behavioral prob- lems such as through the use of infolines, health information technology, or other means as determined by the Secretary; (7) provide 24-hour care management and support during transitions in care settings in- cluding— (A) a transitional care program that pro- vides onsite visits from the care coordi- nator,1 assists with the development of dis- charge plans and medication reconciliation upon admission to and discharge from the hospitals,2 nursing home, or other institu- tion setting; (B) discharge planning and counseling sup- port to providers, patients, caregivers, and authorized representatives; (C) assuring that post-discharge care plans include medication management, as appro- priate; (D) referrals for mental and behavioral health services, which may include the use of infolines; and (E) transitional health care needs from adolescence to adulthood; (8) serve as a liaison to community preven- tion and treatment programs; (9) demonstrate a capacity to implement and maintain health information technology that meets the requirements of certified EHR tech- nology (as defined in section 300jj of this title) to facilitate coordination among members of the applicable care team and affiliated pri- mary care practices; and (10) where applicable, report to the Sec- retary information on quality measures used under section 280j–2 of this title. (d) Requirement for primary care providers A provider who contracts with a care team shall— (1) provide a care plan to the care team for each patient participant; (2) provide access to participant health records; and (3) meet regularly with the care team to en- sure integration of care. (e) Reporting to Secretary An entity that receives a grant or contract under subsection (a) shall submit to the Sec- retary a report that describes and evaluates, as requested by the Secretary, the activities car- ried out by the entity under subsection (c). (f) Definition of primary care In this section, the term ‘‘primary care’’ means the provision of integrated, accessible health care services by clinicians who are ac- countable for addressing a large majority of per- sonal health care needs, developing a sustained partnership with patients, and practicing in the context of family and community. (Pub. L. 111–148, title III, § 3502, title X, § 10321, Mar. 23, 2010, 124 Stat. 513, 952.) Editorial Notes REFERENCES IN TEXT Section 2703, referred to in subsec. (b)(5), means sec- tion 2703 of Pub. L. 111–148. CODIFICATION Section was enacted as part of the Patient Protection and Affordable Care Act, and not as part of the Public Health Service Act which comprises this chapter. AMENDMENTS 2010—Subsec. (c)(2)(A). Pub. L. 111–148, § 10321, in- serted ‘‘or other primary care providers’’ after ‘‘physi- cians’’. SUBPART VII—DRUG PRICING AGREEMENTS § 256b. Limitation on prices of drugs purchased by covered entities (a) Requirements for agreement with Secretary (1) In general The Secretary shall enter into an agreement with each manufacturer of covered outpatient drugs under which the amount required to be paid (taking into account any rebate or dis- count, as provided by the Secretary) to the manufacturer for covered outpatient drugs (other than drugs described in paragraph (3)) purchased by a covered entity on or after the first day of the first month that begins after November 4, 1992, does not exceed an amount equal to the average manufacturer price for the drug under title XIX of the Social Secu- rity Act [42 U.S.C. 1396 et seq.] in the pre- ceding calendar quarter, reduced by the rebate percentage described in paragraph (2). Each such agreement shall require that the manu- facturer furnish the Secretary with reports, on a quarterly basis, of the price for each covered outpatient drug subject to the agreement that, according to the manufacturer, represents the maximum price that covered entities may per- missibly be required to pay for the drug (re- ferred to in this section as the ‘‘ceiling price’’), and shall require that the manufac- turer offer each covered entity covered out- patient drugs for purchase at or below the ap- plicable ceiling price if such drug is made available to any other purchaser at any price. (2) ‘‘Rebate percentage’’ defined (A) In general For a covered outpatient drug purchased in a calendar quarter, the ‘‘rebate percent- age’’ is the amount (expressed as a percent- age) equal to— (i) the average total rebate required under section 1927(c) of the Social Security Act [42 U.S.C. 1396r–8(c)] with respect to the drug (for a unit of the dosage form and strength involved) during the preceding calendar quarter; divided by (ii) the average manufacturer price for such a unit of the drug during such quar- ter. (B) Over the counter drugs (i) In general For purposes of subparagraph (A), in the case of over the counter drugs, the ‘‘rebate Page 436 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b 1 See References in Text note below. percentage’’ shall be determined as if the rebate required under section 1927(c) of the Social Security Act [42 U.S.C. 1396r–8(c)] is based on the applicable percentage pro- vided under section 1927(c)(3) of such Act. (ii) ‘‘Over the counter drug’’ defined The term ‘‘over the counter drug’’ means a drug that may be sold without a pre- scription and which is prescribed by a phy- sician (or other persons authorized to pre- scribe such drug under State law). (3) Drugs provided under State medicaid plans Drugs described in this paragraph are drugs purchased by the entity for which payment is made by the State under the State plan for medical assistance under title XIX of the So- cial Security Act [42 U.S.C. 1396 et seq.]. (4) ‘‘Covered entity’’ defined In this section, the term ‘‘covered entity’’ means an entity that meets the requirements described in paragraph (5) and is one of the fol- lowing: (A) A Federally-qualified health center (as defined in section 1905(l)(2)(B) of the Social Security Act [42 U.S.C. 1396d(l)(2)(B)]). (B) An entity receiving a grant under sec- tion 256a 1 of this title. (C) A family planning project receiving a grant or contract under section 300 of this title. (D) An entity receiving a grant under sub- part II 1 of part C of subchapter XXIV (relat- ing to categorical grants for outpatient early intervention services for HIV disease). (E) A State-operated AIDS drug pur- chasing assistance program receiving finan- cial assistance under subchapter XXIV. (F) A black lung clinic receiving funds under section 937(a) of title 30. (G) A comprehensive hemophilia diag- nostic treatment center receiving a grant under section 501(a)(2) of the Social Security Act [42 U.S.C. 701(a)(2)]. (H) A Native Hawaiian Health Center re- ceiving funds under the Native Hawaiian Health Care Act of 1988. (I) An urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act [25 U.S.C. 1651 et seq.]. (J) Any entity receiving assistance under subchapter XXIV (other than a State or unit of local government or an entity described in subparagraph (D)), but only if the entity is certified by the Secretary pursuant to paragraph (7). (K) An entity receiving funds under sec- tion 247c of this title (relating to treatment of sexually transmitted diseases) or section 247b(j)(2) 1 of this title (relating to treatment of tuberculosis) through a State or unit of local government, but only if the entity is certified by the Secretary pursuant to para- graph (7). (L) A subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Social Security Act [42 U.S.C. 1395ww(d)(1)(B)]) that— (i) is owned or operated by a unit of State or local government, is a public or private non-profit corporation which is formally granted governmental powers by a unit of State or local government, or is a private non-profit hospital which has a contract with a State or local government to provide health care services to low in- come individuals who are not entitled to benefits under title XVIII of the Social Se- curity Act [42 U.S.C. 1395 et seq.] or eligi- ble for assistance under the State plan under this subchapter; (ii) for the most recent cost reporting pe- riod that ended before the calendar quar- ter involved, had a disproportionate share adjustment percentage (as determined under section 1886(d)(5)(F) of the Social Se- curity Act [42 U.S.C. 1395ww(d)(5)(F)]) greater than 11.75 percent or was described in section 1886(d)(5)(F)(i)(II) of such Act [42 U.S.C. 1395ww(d)(5)(F)(i)(II)]; and (iii) does not obtain covered outpatient drugs through a group purchasing organi- zation or other group purchasing arrange- ment. (M) A children’s hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(iii) of the Social Security Act [42 U.S.C. 1395ww(d)(1)(B)(iii)], or a free-standing can- cer hospital excluded from the Medicare pro- spective payment system pursuant to sec- tion 1886(d)(1)(B)(v) of the Social Security Act, that would meet the requirements of subparagraph (L), including the dispropor- tionate share adjustment percentage re- quirement under clause (ii) of such subpara- graph, if the hospital were a subsection (d) hospital as defined by section 1886(d)(1)(B) of the Social Security Act. (N) An entity that is a critical access hos- pital (as determined under section 1820(c)(2) of the Social Security Act [42 U.S.C. 1395i–4(c)(2)]), and that meets the require- ments of subparagraph (L)(i). (O) An entity that is a rural referral cen- ter, as defined by section 1886(d)(5)(C)(i) of the Social Security Act [42 U.S.C. 1395ww(d)(5)(C)(i)], or a sole community hos- pital, as defined by section 1886(d)(5)(C)(iii) of such Act, and that both meets the re- quirements of subparagraph (L)(i) and has a disproportionate share adjustment percent- age equal to or greater than 8 percent. (5) Requirements for covered entities (A) Prohibiting duplicate discounts or re- bates (i) In general A covered entity shall not request pay- ment under title XIX of the Social Secu- rity Act [42 U.S.C. 1396 et seq.] for medical assistance described in section 1905(a)(12) of such Act [42 U.S.C. 1396d(a)(12)] with re- spect to a drug that is subject to an agree- ment under this section if the drug is sub- ject to the payment of a rebate to the State under section 1927 of such Act [42 U.S.C. 1396r–8]. (ii) Establishment of mechanism The Secretary shall establish a mecha- nism to ensure that covered entities com- Page 437 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b 2 So in original. Probably should be ‘‘subparagraph’’. ply with clause (i). If the Secretary does not establish a mechanism within 12 months under the previous sentence, the requirements of section 1927(a)(5)(C) of the Social Security Act [42 U.S.C. 1396r–8(a)(5)(C)] shall apply. (B) Prohibiting resale of drugs With respect to any covered outpatient drug that is subject to an agreement under this subsection, a covered entity shall not resell or otherwise transfer the drug to a person who is not a patient of the entity. (C) Auditing A covered entity shall permit the Sec- retary and the manufacturer of a covered outpatient drug that is subject to an agree- ment under this subsection with the entity (acting in accordance with procedures estab- lished by the Secretary relating to the num- ber, duration, and scope of audits) to audit at the Secretary’s or the manufacturer’s ex- pense the records of the entity that directly pertain to the entity’s compliance with the requirements described in subparagraphs 2 (A) or (B) with respect to drugs of the manu- facturer. (D) Additional sanction for noncompliance If the Secretary finds, after audit as de- scribed in subparagraph (C) and after notice and hearing, that a covered entity is in vio- lation of a requirement described in subpara- graphs 2 (A) or (B), the covered entity shall be liable to the manufacturer of the covered outpatient drug that is the subject of the violation in an amount equal to the reduc- tion in the price of the drug (as described in subparagraph (A)) provided under the agree- ment between the entity and the manufac- turer under this paragraph. (6) Treatment of distinct units of hospitals In the case of a covered entity that is a dis- tinct part of a hospital, the hospital shall not be considered a covered entity under this para- graph unless the hospital is otherwise a cov- ered entity under this subsection. (7) Certification of certain covered entities (A) Development of process Not later than 60 days after November 4, 1992, the Secretary shall develop and imple- ment a process for the certification of enti- ties described in subparagraphs (J) and (K) of paragraph (4). (B) Inclusion of purchase information The process developed under subparagraph (A) shall include a requirement that an enti- ty applying for certification under this para- graph submit information to the Secretary concerning the amount such entity expended for covered outpatient drugs in the pre- ceding year so as to assist the Secretary in evaluating the validity of the entity’s subse- quent purchases of covered outpatient drugs at discounted prices. (C) Criteria The Secretary shall make available to all manufacturers of covered outpatient drugs a description of the criteria for certification under this paragraph. (D) List of purchasers and dispensers The certification process developed by the Secretary under subparagraph (A) shall in- clude procedures under which each State shall, not later than 30 days after the sub- mission of the descriptions under subpara- graph (C), prepare and submit a report to the Secretary that contains a list of entities de- scribed in subparagraphs (J) and (K) of para- graph (4) that are located in the State. (E) Recertification The Secretary shall require the recertifi- cation of entities certified pursuant to this paragraph on a not more frequent than an- nual basis, and shall require that such enti- ties submit information to the Secretary to permit the Secretary to evaluate the valid- ity of subsequent purchases by such entities in the same manner as that required under subparagraph (B). (8) Development of prime vendor program The Secretary shall establish a prime vendor program under which covered entities may enter into contracts with prime vendors for the distribution of covered outpatient drugs. If a covered entity obtains drugs directly from a manufacturer, the manufacturer shall be re- sponsible for the costs of distribution. (9) Notice to manufacturers The Secretary shall notify manufacturers of covered outpatient drugs and single State agencies under section 1902(a)(5) of the Social Security Act [42 U.S.C. 1396a(a)(5)] of the iden- tities of covered entities under this paragraph, and of entities that no longer meet the re- quirements of paragraph (5) or that are no longer certified pursuant to paragraph (7). (10) No prohibition on larger discount Nothing in this subsection shall prohibit a manufacturer from charging a price for a drug that is lower than the maximum price that may be charged under paragraph (1). (b) Other definitions (1) In general In this section, the terms ‘‘average manufac- turer price’’, ‘‘covered outpatient drug’’, and ‘‘manufacturer’’ have the meaning given such terms in section 1927(k) of the Social Security Act [42 U.S.C. 1396r–8(k)]. (2) Covered drug In this section, the term ‘‘covered drug’’— (A) means a covered outpatient drug (as defined in section 1927(k)(2) of the Social Se- curity Act [42 U.S.C. 1396r–8(k)(2)]); and (B) includes, notwithstanding paragraph (3)(A) of section 1927(k) of such Act [42 U.S.C. 1396r–8(k)(3)(A)], a drug used in connection with an inpatient or outpatient service pro- vided by a hospital described in subpara- graph (L), (M), (N), or (O) of subsection (a)(4) that is enrolled to participate in the drug discount program under this section. Page 438 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b (c) Repealed. Pub. L. 111–152, title II, § 2302(2), Mar. 30, 2010, 124 Stat. 1083 (d) Improvements in program integrity (1) Manufacturer compliance (A) In general From amounts appropriated under para- graph (4), the Secretary shall provide for im- provements in compliance by manufacturers with the requirements of this section in order to prevent overcharges and other vio- lations of the discounted pricing require- ments specified in this section. (B) Improvements The improvements described in subpara- graph (A) shall include the following: (i) The development of a system to en- able the Secretary to verify the accuracy of ceiling prices calculated by manufactur- ers under subsection (a)(1) and charged to covered entities, which shall include the following: (I) Developing and publishing through an appropriate policy or regulatory issuance, precisely defined standards and methodology for the calculation of ceil- ing prices under such subsection. (II) Comparing regularly the ceiling prices calculated by the Secretary with the quarterly pricing data that is re- ported by manufacturers to the Sec- retary. (III) Performing spot checks of sales transactions by covered entities. (IV) Inquiring into the cause of any pricing discrepancies that may be identi- fied and either taking, or requiring man- ufacturers to take, such corrective ac- tion as is appropriate in response to such price discrepancies. (ii) The establishment of procedures for manufacturers to issue refunds to covered entities in the event that there is an over- charge by the manufacturers, including the following: (I) Providing the Secretary with an ex- planation of why and how the overcharge occurred, how the refunds will be cal- culated, and to whom the refunds will be issued. (II) Oversight by the Secretary to en- sure that the refunds are issued accu- rately and within a reasonable period of time, both in routine instances of retro- active adjustment to relevant pricing data and exceptional circumstances such as erroneous or intentional overcharging for covered outpatient drugs. (iii) The provision of access through the Internet website of the Department of Health and Human Services to the applica- ble ceiling prices for covered outpatient drugs as calculated and verified by the Secretary in accordance with this section, in a manner (such as through the use of password protection) that limits such ac- cess to covered entities and adequately assures security and protection of privi- leged pricing data from unauthorized re- disclosure. (iv) The development of a mechanism by which— (I) rebates and other discounts pro- vided by manufacturers to other pur- chasers subsequent to the sale of covered outpatient drugs to covered entities are reported to the Secretary; and (II) appropriate credits and refunds are issued to covered entities if such dis- counts or rebates have the effect of low- ering the applicable ceiling price for the relevant quarter for the drugs involved. (v) Selective auditing of manufacturers and wholesalers to ensure the integrity of the drug discount program under this sec- tion. (vi) The imposition of sanctions in the form of civil monetary penalties, which— (I) shall be assessed according to standards established in regulations to be promulgated by the Secretary not later than 180 days after March 23, 2010; (II) shall not exceed $5,000 for each in- stance of overcharging a covered entity that may have occurred; and (III) shall apply to any manufacturer with an agreement under this section that knowingly and intentionally charges a covered entity a price for pur- chase of a drug that exceeds the max- imum applicable price under subsection (a)(1). (2) Covered entity compliance (A) In general From amounts appropriated under para- graph (4), the Secretary shall provide for im- provements in compliance by covered enti- ties with the requirements of this section in order to prevent diversion and violations of the duplicate discount provision and other requirements specified under subsection (a)(5). (B) Improvements The improvements described in subpara- graph (A) shall include the following: (i) The development of procedures to en- able and require covered entities to regu- larly update (at least annually) the infor- mation on the Internet website of the De- partment of Health and Human Services relating to this section. (ii) The development of a system for the Secretary to verify the accuracy of infor- mation regarding covered entities that is listed on the website described in clause (i). (iii) The development of more detailed guidance describing methodologies and op- tions available to covered entities for bill- ing covered outpatient drugs to State Med- icaid agencies in a manner that avoids du- plicate discounts pursuant to subsection (a)(5)(A). (iv) The establishment of a single, uni- versal, and standardized identification sys- tem by which each covered entity site can be identified by manufacturers, distribu- tors, covered entities, and the Secretary for purposes of facilitating the ordering, Page 439 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b 3 So in original. Probably should be ‘‘subsection’’. purchasing, and delivery of covered out- patient drugs under this section, including the processing of chargebacks for such drugs. (v) The imposition of sanctions, in ap- propriate cases as determined by the Sec- retary, additional to those to which cov- ered entities are subject under subsection (a)(5)(D), through one or more of the fol- lowing actions: (I) Where a covered entity knowingly and intentionally violates subsection (a)(5)(B), the covered entity shall be re- quired to pay a monetary penalty to a manufacturer or manufacturers in the form of interest on sums for which the covered entity is found liable under sub- section (a)(5)(D), such interest to be compounded monthly and equal to the current short term interest rate as de- termined by the Federal Reserve for the time period for which the covered entity is liable. (II) Where the Secretary determines a violation of subsection (a)(5)(B) was sys- tematic and egregious as well as know- ing and intentional, removing the cov- ered entity from the drug discount pro- gram under this section and disquali- fying the entity from re-entry into such program for a reasonable period of time to be determined by the Secretary. (III) Referring matters to appropriate Federal authorities within the Food and Drug Administration, the Office of In- spector General of Department of Health and Human Services, or other Federal agencies for consideration of appropriate action under other Federal statutes, such as the Prescription Drug Marketing Act (21 U.S.C. 353).1 (3) Administrative dispute resolution process (A) In general Not later than 180 days after March 23, 2010, the Secretary shall promulgate regula- tions to establish and implement an admin- istrative process for the resolution of claims by covered entities that they have been overcharged for drugs purchased under this section, and claims by manufacturers, after the conduct of audits as authorized by sub- section (a)(5)(C), of violations of sub- sections 3 (a)(5)(A) or (a)(5)(B), including ap- propriate procedures for the provision of remedies and enforcement of determinations made pursuant to such process through mechanisms and sanctions described in para- graphs (1)(B) and (2)(B). (B) Deadlines and procedures Regulations promulgated by the Secretary under subparagraph (A) shall— (i) designate or establish a decision-mak- ing official or decision-making body with- in the Department of Health and Human Services to be responsible for reviewing and finally resolving claims by covered en- tities that they have been charged prices for covered outpatient drugs in excess of the ceiling price described in subsection (a)(1), and claims by manufacturers that violations of subsection (a)(5)(A) or (a)(5)(B) have occurred; (ii) establish such deadlines and proce- dures as may be necessary to ensure that claims shall be resolved fairly, efficiently, and expeditiously; (iii) establish procedures by which a cov- ered entity may discover and obtain such information and documents from manufac- turers and third parties as may be relevant to demonstrate the merits of a claim that charges for a manufacturer’s product have exceeded the applicable ceiling price under this section, and may submit such docu- ments and information to the administra- tive official or body responsible for adjudi- cating such claim; (iv) require that a manufacturer conduct an audit of a covered entity pursuant to subsection (a)(5)(C) as a prerequisite to ini- tiating administrative dispute resolution proceedings against a covered entity; (v) permit the official or body designated under clause (i), at the request of a manu- facturer or manufacturers, to consolidate claims brought by more than one manufac- turer against the same covered entity where, in the judgment of such official or body, consolidation is appropriate and con- sistent with the goals of fairness and econ- omy of resources; and (vi) include provisions and procedures to permit multiple covered entities to jointly assert claims of overcharges by the same manufacturer for the same drug or drugs in one administrative proceeding, and per- mit such claims to be asserted on behalf of covered entities by associations or organi- zations representing the interests of such covered entities and of which the covered entities are members. (C) Finality of administrative resolution The administrative resolution of a claim or claims under the regulations promulgated under subparagraph (A) shall be a final agen- cy decision and shall be binding upon the parties involved, unless invalidated by an order of a court of competent jurisdiction. (4) Authorization of appropriations There are authorized to be appropriated to carry out this subsection, such sums as may be necessary for fiscal year 2010 and each suc- ceeding fiscal year. (e) Exclusion of orphan drugs for certain cov- ered entities For covered entities described in subparagraph (M) (other than a children’s hospital described in subparagraph (M)), (N), or (O) of subsection (a)(4), the term ‘‘covered outpatient drug’’ shall not include a drug designated by the Secretary under section 360bb of title 21 for a rare disease or condition. (July 1, 1944, ch. 373, title III, § 340B, as added Pub. L. 102–585, title VI, § 602(a), Nov. 4, 1992, 106 Stat. 4967; amended Pub. L. 103–43, title XX, § 2008(i)(1)(A), June 10, 1993, 107 Stat. 212; Pub. L. Page 440 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b 111–148, title II, § 2501(f)(1), title VII, §§ 7101(a)–(d), 7102, Mar. 23, 2010, 124 Stat. 309, 821–823; Pub. L. 111–152, title II, § 2302, Mar. 30, 2010, 124 Stat. 1082; Pub. L. 111–309, title II, § 204(a)(1), Dec. 15, 2010, 124 Stat. 3289.) Editorial Notes REFERENCES IN TEXT The Social Security Act, referred to in subsec. (a)(1), (3), (4)(L)(i), (5)(A)(i), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, which is classified generally to chapter 7 (§ 301 et seq.) of this title. Titles XVIII and XIX of the Act are classified generally to subchapters XVIII (§ 1395 et seq.) and XIX (§ 1396 et seq.) of chapter 7 of this title, respectively. For complete classification of this Act to the Code, see section 1305 of this title and Tables. Section 256a of this title, referred to in subsec. (a)(4)(B), was in the original a reference to section 340A of act July 1, 1944, which was repealed by Pub. L. 104–299, § 4(a)(3), Oct. 11, 1996, 110 Stat. 3645. Subse- quently, a new section 340A was added to the act of July 1, 1944, by Pub. L. 109–18, § 2, June 29, 2005, 119 Stat. 340, which is also classified to section 256a of this title. Subpart II of part C of subchapter XXIV, referred to in subsec. (a)(4)(D), was redesignated subpart I of part C of subchapter XXIV of this chapter by Pub. L. 106–345, title III, § 301(b)(1), Oct. 20, 2000, 114 Stat. 1345, and is classified to section 300ff–51 et seq. of this title. The Native Hawaiian Health Care Act of 1988, referred to in subsec. (a)(4)(H), was Pub. L. 100–579, Oct. 31, 1988, 102 Stat. 2916, and subtitle D of title II of Pub. L. 100–690, Nov. 18, 1988, 102 Stat. 4222, which were classi- fied generally to chapter 122 (§ 11701 et seq.) of this title prior to being amended generally and renamed the Na- tive Hawaiian Health Care Improvement Act by Pub. L. 102–396. For complete classification of this Act to the Code, see Tables. The Indian Health Care Improvement Act, referred to in subsec. (a)(4)(I), is Pub. L. 94–437, Sept. 30, 1976, 90 Stat. 1400. Title V of the Act is classified generally to subchapter IV (§ 1651 et seq.) of chapter 18 of Title 25, Indians. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of Title 25 and Tables. Section 247b(j)(2) of this title, referred to in subsec. (a)(4)(K), was repealed and section 247b(j)(1)(B) was re- designated section 247b(j)(2) by Pub. L. 103–183, title III, § 301(b)(1)(A), (C), Dec. 14, 1993, 107 Stat. 2235. The Prescription Drug Marketing Act, referred to in subsec. (d)(2)(B)(v)(III), probably means the Prescrip- tion Drug Marketing Act of 1987, Pub. L. 100–293, Apr. 22, 1988, 102 Stat. 95, which amended sections 331, 333, 353, and 381 of Title 21, Food and Drugs, and enacted provisions set out as notes under sections 301 and 353 of Title 21. For complete classification of this Act to the Code, see Short Title of 1988 Amendments note set out under section 301 of Title 21 and Tables. CODIFICATION Another section 340B of act July 1, 1944, was renum- bered section 340C and is classified to section 256c of this title. AMENDMENTS 2010—Subsec. (a)(1). Pub. L. 111–152, § 2302(1)(A), sub- stituted ‘‘covered outpatient drug’’ for ‘‘covered drug’’ and ‘‘covered outpatient drugs’’ for ‘‘covered drugs’’ wherever appearing. Pub. L. 111–148, § 7102(b)(1), inserted at end ‘‘Each such agreement shall require that the manufacturer furnish the Secretary with reports, on a quarterly basis, of the price for each covered drug subject to the agreement that, according to the manufacturer, represents the maximum price that covered entities may permissibly be required to pay for the drug (referred to in this sec- tion as the ‘ceiling price’), and shall require that the manufacturer offer each covered entity covered drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.’’ Subsec. (a)(2)(A). Pub. L. 111–152, § 2302(1)(A), sub- stituted ‘‘covered outpatient drug’’ for ‘‘covered drug’’ in introductory provisions. Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drug’’ for ‘‘covered outpatient drug’’ in introductory provisions. Subsec. (a)(2)(B)(i). Pub. L. 111–148, § 2501(f)(1)(A), sub- stituted ‘‘1927(c)(3)’’ for ‘‘1927(c)(4)’’. Subsec. (a)(4)(L). Pub. L. 111–152, § 2302(1)(B), struck out ‘‘and’’ at end of cl. (i), substituted ‘‘; and’’ for pe- riod at end of cl. (ii), and added cl. (iii). Pub. L. 111–148, § 7101(c)(1), in cl. (i), inserted ‘‘and’’ at end, in cl. (ii), substituted period for ‘‘; and’’ at end, and struck out cl. (iii) which read as follows: ‘‘does not obtain covered outpatient drugs through a group pur- chasing organization or other group purchasing ar- rangement.’’ Subsec. (a)(4)(M) to (O). Pub. L. 111–148, § 7101(a), added subpars. (M) to (O). Subsec. (a)(5)(B). Pub. L. 111–152, § 2302(1)(A), sub- stituted ‘‘covered outpatient drug’’ for ‘‘covered drug’’. Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drug’’ for ‘‘covered outpatient drug’’. Subsec. (a)(5)(C). Pub. L. 111–152, § 2302(1)(C)(i), (ii), re- designated subpar. (D) as (C) and struck out former subpar. (C). Prior to amendment, text of subpar. (C) read as follows: ‘‘(i) IN GENERAL.—A hospital described in subpara- graph (L), (M), (N), or (O) of paragraph (4) shall not ob- tain covered outpatient drugs through a group pur- chasing organization or other group purchasing ar- rangement, except as permitted or provided for pursu- ant to clauses (ii) or (iii). ‘‘(ii) INPATIENT DRUGS.—Clause (i) shall not apply to drugs purchased for inpatient use. ‘‘(iii) EXCEPTIONS.—The Secretary shall establish rea- sonable exceptions to clause (i)— ‘‘(I) with respect to a covered outpatient drug that is unavailable to be purchased through the program under this section due to a drug shortage problem, manufacturer noncompliance, or any other cir- cumstance beyond the hospital’s control; ‘‘(II) to facilitate generic substitution when a ge- neric covered outpatient drug is available at a lower price; or ‘‘(III) to reduce in other ways the administrative burdens of managing both inventories of drugs sub- ject to this section and inventories of drugs that are not subject to this section, so long as the exceptions do not create a duplicate discount problem in viola- tion of subparagraph (A) or a diversion problem in violation of subparagraph (B). ‘‘(iv) PURCHASING ARRANGEMENTS FOR INPATIENT DRUGS.—The Secretary shall ensure that a hospital de- scribed in subparagraph (L), (M), (N), or (O) of sub- section (a)(4) that is enrolled to participate in the drug discount program under this section shall have mul- tiple options for purchasing covered outpatient drugs for inpatients, including by utilizing a group pur- chasing organization or other group purchasing ar- rangement, establishing and utilizing its own group purchasing program, purchasing directly from a manu- facturer, and any other purchasing arrangements that the Secretary determines is appropriate to ensure ac- cess to drug discount pricing under this section for in- patient drugs taking into account the particular needs of small and rural hospitals.’’ Pub. L. 111–148, § 7101(c)(2)(B), added subpar. (C). Former subpar. (C) redesignated (D). Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drug’’ for ‘‘covered outpatient drug’’. Subsec. (a)(5)(C)(iv). Pub. L. 111–152, § 2302(1)(A), sub- stituted ‘‘covered outpatient drugs’’ for ‘‘covered drugs’’. Subsec. (a)(5)(D). Pub. L. 111–152, § 2302(1)(C)(ii), (iii), redesignated subpar. (E) as (D) and substituted ‘‘sub- paragraph (C)’’ for ‘‘subparagraph (D)’’. Former subpar. (D) redesignated (C). Page 441 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256b Pub. L. 111–152, § 2302(1)(A), substituted ‘‘covered out- patient drug’’ for ‘‘covered drug’’. Pub. L. 111–148, § 7101(c)(2)(A), redesignated subpar. (C) as (D). Former subpar. (D) redesignated (E). Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drug’’ for ‘‘covered outpatient drug’’. Subsec. (a)(5)(E). Pub. L. 111–152, § 2302(1)(C)(ii), redes- ignated subpar. (E) as (D). Pub. L. 111–152, § 2302(1)(A), substituted ‘‘covered out- patient drug’’ for ‘‘covered drug’’. Pub. L. 111–148, §§ 7101(c)(2)(A), 7102(b)(2), redesignated subpar. (D) as (E) and inserted ‘‘after audit as described in subparagraph (D) and’’ after ‘‘finds,’’. Subsec. (a)(7). Pub. L. 111–152, § 2302(1)(A), substituted ‘‘covered outpatient drugs’’ for ‘‘covered drugs’’ wher- ever appearing. Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drugs’’ for ‘‘covered outpatient drugs’’ wherever ap- pearing. Subsec. (a)(9). Pub. L. 111–152, § 2302(1)(A), substituted ‘‘covered outpatient drugs’’ for ‘‘covered drugs’’. Pub. L. 111–148, § 7101(b)(1), substituted ‘‘covered drugs’’ for ‘‘covered outpatient drugs’’. Subsec. (b). Pub. L. 111–148, § 7101(b)(2)(A), which di- rected substitution of ‘‘Other definitions’’ for ‘‘Other definition’’ in subsec. heading, designation of existing provisions as par. (1), and insertion of par. (1) heading, was executed by reenacting subsec. heading without change, designating existing provisions as par. (1), and inserting par. (1) heading, to reflect the probable intent of Congress. Subsec. (b)(2). Pub. L. 111–148, § 7101(b)(2)(B), added par. (2). Subsec. (c). Pub. L. 111–152, § 2302(2), struck out sub- sec. (c). Text read as follows: ‘‘Not later than 90 days after the date of filing of the hospital’s most recently filed Medicare cost report, the hospital shall issue a credit as determined by the Secretary to the State Medicaid program for inpatient covered drugs provided to Medicaid recipients.’’ Pub. L. 111–148, § 7101(d), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: ‘‘A manufacturer is deemed to meet the re- quirements of subsection (a) of this section if the man- ufacturer establishes to the satisfaction of the Sec- retary that the manufacturer would comply (and has offered to comply) with the provisions of this section (as in effect immediately after November 4, 1992), as ap- plied by the Secretary, and would have entered into an agreement under this section (as such section was in ef- fect at such time), but for a legislative change in this section (or the application of this section) after Novem- ber 4, 1992.’’ Pub. L. 111–148, § 2501(f)(1)(B), (C), redesignated sub- sec. (d) as (c) and struck out former subsec. (c). Text of former subsec. (c) read as follows: ‘‘Any reference in this section to a provision of the Social Security Act shall be deemed to be a reference to the provision as in effect on November 4, 1992.’’ Subsec. (d). Pub. L. 111–152, § 2302(3), substituted ‘‘cov- ered outpatient drugs’’ for ‘‘covered drugs’’ wherever appearing and substituted ‘‘(a)(5)(C)’’ for ‘‘(a)(5)(D)’’ and ‘‘(a)(5)(D)’’ for ‘‘(a)(5)(E)’’ in two places. Pub. L. 111–148, § 7102(a), which directed general amendment of subsec. (d), was executed by adding sub- sec. (d) after subsec. (c) to reflect the probable intent of Congress, because no subsec. (d) appeared subsequent to amendment by Pub. L. 111–148, § 2501(f)(1)(C). See below. Pub. L. 111–148, § 2501(f)(1)(C), redesignated subsec. (d) as (c). Subsec. (e). Pub. L. 111–309 substituted ‘‘covered enti- ties described in subparagraph (M) (other than a chil- dren’s hospital described in subparagraph (M))’’ for ‘‘covered entities described in subparagraph (M)’’. Pub. L. 111–152, § 2302(4), added subsec. (e). 1993—Pub. L. 103–43 made technical amendment to di- rectory language of Pub. L. 102–585, § 602(a), which en- acted this section. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–309, title II, § 204(a)(2), Dec. 15, 2010, 124 Stat. 3289, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall take effect as if included in the enactment of section 2302 of the Health Care and Education Reconciliation Act of 2010 (Public Law 111–152).’’ Pub. L. 111–148, title II, § 2501(f)(2), Mar. 23, 2010, 124 Stat. 310, provided that: ‘‘The amendments made by this subsection [amending this section] take effect on January 1, 2010.’’ Pub. L. 111–148, title VII, § 7101(e), Mar. 23, 2010, 124 Stat. 823, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] and section 7102 [amending this section] shall take effect on January 1, 2010, and shall apply to drugs purchased on or after January 1, 2010. ‘‘(2) EFFECTIVENESS.—The amendments made by this section and section 7102 shall be effective and shall be taken into account in determining whether a manufac- turer is deemed to meet the requirements of section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)), notwithstanding any other provision of law.’’ ELIGIBILITY EXCEPTION FOR THE DRUG DISCOUNT PRO- GRAM DUE TO THE COVID–19 PUBLIC HEALTH EMER- GENCY Pub. L. 117–103, div. P, title I, § 121, Mar. 15, 2022, 136 Stat. 792, provided that: ‘‘(a) IN GENERAL.—Notwithstanding any other provi- sion of law, in the case of a hospital described in sub- section (b) that, with respect to cost reporting periods that begin during fiscal year 2020 or a subsequent fiscal year, but do not end after December 31, 2022, does not meet the applicable requirement for the dispropor- tionate share adjustment percentage described in sub- section (c) by reason of the COVID–19 public health emergency, but otherwise meets the requirements for being a covered entity under subparagraph (L), (M), or (O) of subsection (a)(4) of section 340B of the Public Health Service Act (42 U.S.C. 256b) and is in compliance with all other requirements of the program under such section, shall be deemed a covered entity for purposes of such section for the period— ‘‘(1) beginning on the date of the enactment of this Act [Mar. 15, 2022] (or, if later, with the first of such cost reporting periods for which the hospital does not so meet such applicable requirement for the dis- proportionate share adjustment percentage, but oth- erwise meets all other such requirements for being such a covered entity and of such program); and ‘‘(2) ending with the last of such cost reporting pe- riods (ending not later than December 31, 2022) for which the hospital does not so meet such applicable requirement for the disproportionate share adjust- ment percentage, but otherwise meets all other such requirements for being such a covered entity and of such program. ‘‘(b) HOSPITALS.—A hospital described in this sub- section is an entity that, on the day before the first day of the COVID–19 public health emergency, was a cov- ered entity described in subparagraph (L), (M), or (O) of subsection (a)(4) of section 340B of the Public Health Service Act participating in the drug discount program under such section. ‘‘(c) APPLICABLE REQUIREMENT FOR DISPROPORTIONATE SHARE ADJUSTMENT PERCENTAGE.—The applicable re- quirement for the disproportionate share adjustment percentage described in this subsection is— ‘‘(1) in the case of a hospital described in subsection (a) that otherwise meets the requirements under sub- paragraph (L) or (M) of section 340B(a)(4) of the Pub- lic Health Service Act, the requirement under sub- paragraph (L)(ii) of such section; and ‘‘(2) in the case of a hospital described in subsection (a) that otherwise meets the requirements under sub- Page 442 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 256c paragraph (O) of such section 340B(a)(4), the require- ment with respect to the disproportionate share ad- justment percentage described in such subparagraph (O). ‘‘(d) SELF-ATTESTATION.— ‘‘(1) IN GENERAL.—A hospital described in sub- section (a) that fails to meet the applicable require- ment for the disproportionate share adjustment per- centage described in subsection (c) shall, within 30 days of such failure, or in the case of a hospital where such failure occurred prior to the date of enactment of this Act but after the start of the COVID-19 public health emergency, within 30 days of the date of en- actment, provide to the Secretary of Health and Human Services an attestation that contains infor- mation on any actions taken by or other impact on such hospital in response to or as a result of the COVID-19 public health emergency that may have im- pacted the ability to meet the applicable requirement for the disproportionate share adjustment percentage described in subsection (c). ‘‘(2) PAPERWORK REDUCTION ACT.—Chapter 35 of title 44, United States Code, shall not apply to the collec- tion of information provided pursuant to this sub- section. ‘‘(e) DEFINITIONS.—In this section: ‘‘(1) COVERED ENTITY.—The term ‘covered entity’ has the meaning given such term in section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4)). ‘‘(2) COVID–19 PUBLIC HEALTH EMERGENCY.—The term ‘COVID–19 public health emergency’ means the public health emergency declared by the Secretary of Health and Human Services under section 319 of the Public Health Service Act (42 U.S.C. 247d) on January 31, 2020, with respect to COVID–19 (or any renewal of such declaration).’’ PRICING OF DIAGNOSTIC TESTING Pub. L. 116–136, div. A, title III, § 3202, Mar. 27, 2020, 134 Stat. 367, provided that: ‘‘(a) REIMBURSEMENT RATES.—A group health plan or a health insurance issuer providing coverage of items and services described in section 6001(a) of division F of the Families First Coronavirus Response Act (Public Law 116–127) [42 U.S.C. 1320b–5 note] with respect to an enrollee shall reimburse the provider of the diagnostic testing as follows: ‘‘(1) If the health plan or issuer has a negotiated rate with such provider in effect before the public health emergency declared under section 319 of the Public Health Service Act (42 U.S.C. 247d), such nego- tiated rate shall apply throughout the period of such declaration. ‘‘(2) If the health plan or issuer does not have a ne- gotiated rate with such provider, such plan or issuer shall reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price. ‘‘(b) REQUIREMENT TO PUBLICIZE CASH PRICE FOR DIAG- NOSTIC TESTING FOR COVID–19.— ‘‘(1) IN GENERAL.—During the emergency period de- clared under section 319 of the Public Health Service Act (42 U.S.C. 247d), each provider of a diagnostic test for COVID–19 shall make public the cash price for such test on a public internet website of such pro- vider. ‘‘(2) CIVIL MONETARY PENALTIES.—The Secretary of Health and Human Services may impose a civil mone- tary penalty on any provider of a diagnostic test for COVID–19 that is not in compliance with paragraph (1) and has not completed a corrective action plan to comply with the requirements of such paragraph, in an amount not to exceed $300 per day that the viola- tion is ongoing.’’ STUDY OF TREATMENT OF CERTAIN CLINICS AS COVERED ENTITIES ELIGIBLE FOR PRESCRIPTION DRUG DISCOUNTS Pub. L. 102–585, title VI, § 602(b), Nov. 4, 1992, 106 Stat. 4970, directed Secretary of Health and Human Services to conduct a study of feasibility and desirability of in- cluding specified entities receiving funds from a State as covered entities eligible for limitations on prices of covered outpatient drugs under 42 U.S.C. 256b(a) and, not later than 1 year after Nov. 4, 1992, to submit a re- port to Congress on the study, including in the report a description of the entities that were the subject of the study, an analysis of the extent to which such enti- ties procured prescription drugs, and an analysis of the impact of the inclusion of such entities as covered enti- ties on the quality of care provided to and the health status of the patients of such entities. SUBPART VIII—BULK PURCHASES OF VACCINES FOR CERTAIN PROGRAMS Editorial Notes CODIFICATION Pub. L. 103–43, title XX, § 2008(i)(2)(A)(i), June 10, 1993, 107 Stat. 213, made technical amendment relating to placement of subpart VIII within part D of this sub- chapter. § 256c. Bulk purchases of vaccines for certain programs (a) Agreements for purchases (1) In general Not later than 180 days after October 27, 1992, the Secretary, acting through the Director of the Centers for Disease Control and Preven- tion and in consultation with the Adminis- trator of the Health Resources and Services Administration, shall enter into negotiations with manufacturers of vaccines for the pur- pose of establishing and maintaining agree- ments under which entities described in para- graph (2) may purchase vaccines from the manufacturers at the prices specified in the agreements. (2) Relevant entities The entities referred to in paragraph (1) are entities that provide immunizations against vaccine-preventable diseases with assistance provided under section 254b of this title. (b) Negotiation of prices In carrying out subsection (a), the Secretary shall, to the extent practicable, ensure that the prices provided for in agreements under such subsection are comparable to the prices provided for in agreements negotiated by the Secretary on behalf of grantees under section 247b(j)(1) of this title. (c) Authority of Secretary In carrying out subsection (a), the Secretary, in the discretion of the Secretary, may enter into the agreements described in such sub- section (and may decline to enter into such agreements), may modify such agreements, may extend such agreements, and may terminate such agreements. (d) Rule of construction This section may not be construed as requir- ing any State to reduce or terminate the supply of vaccines provided by the State to any of the entities described in subsection (a)(2). (July 1, 1944, ch. 373, title III, § 340C, formerly § 340B, as added Pub. L. 102–531, title III, § 305, Oct. 27, 1992, 106 Stat. 3494; renumbered § 340C,