Section 3301. Medicare Coverage Gap Discount Program

• Requires manufacturers to participate in the Medicare coverage gap discount program if they are to participate in the Medicare Part D prescription drug program.
• Applies to covered part D drugs dispensed under this part on or after July 1, 2010 with some exceptions.
• Establishes a new Medicare Coverage Gap Discount Program by no later than July 1, 2010:
  • With some exceptions related to the initial start up (the period of July 1, 2010 through December 31, 2011), such discounted prices shall be provided to the applicable beneficiary at the pharmacy or by the mail order service at the point-of-sale of an applicable drug.
  • During the initial start up, if it is not practicable to provide such discounted prices at the point-of- sale, the Secretary may establish procedures to provide such discounted prices as soon as practicable after the point-of-sale.
• No later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between:
  • The negotiated price of the applicable drug; and
  • The discounted price of the applicable drug;
• Defines “discounted price” as 50% of the negotiated price of the applicable drug of a manufacturer.
• Does not affect the responsibility of an applicable beneficiary to pay a dispensing fee for an applicable drug.
• Defines “manufacturer” as any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.
• Amends the definition of “Best Price” under the Medicaid program to reflect this new program.
• The Reconciliation Bill (P.L. 111-152) further amends this section by:
  • Establishing a one-time rebate of $250 in 2010 for beneficiaries who reach the coverage gap.
     

1. Applies to covered Part D drugs dispensed on or after July 1, 2010.  The Secretary must establish a Medicare coverage gap discount program by no later than July 1, 2010.
2. The Secretary must establish a model agreement for use in the new program by no later than April 1, 2010. Manufacturers must enter into an agreement no later than May 1, 2010 for the  agreement to be in effective July 1, 2010 through December 31, 2011. For plan years 2012 and beyond, manufacturers must enter into an agreement no later than January 30 of the preceding  year.
3. The amendments that address the inclusion of incurred costs apply to costs incurred on or after July 1, 2010.
4. The amendments of this section apply to drugs dispenses on or after July 1, 2010.