Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69591 

This action is not a ‘‘major rule’’ as 

defined by 5 U.S.C. 804(2). 

C. Petitions for Judicial Review 

Under section 307(b)(1) of the CAA, 

petitions for judicial review of this 

action must be filed in the United States 

Court of Appeals for the appropriate 

circuit by January 14, 2011. Filing a 

petition for reconsideration by the 

Administrator of this final rule does not 

affect the finality of this action for the 

purposes of judicial review nor does it 

extend the time within which a petition 

for judicial review may be filed, and 

shall not postpone the effectiveness of 

such rule or action. This action, 

pertaining to the NY-NJ-CT PM2.5

nonattainment area clean data 

determination, may not be challenged 

later in proceedings to enforce its 

requirements. (See section 307(b)(2).) 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Particulate matter. 

Dated: October 19, 2010. 

H. Curtis Spalding, 

Acting Regional Administrator, Region I. 

Dated: September 29, 2010. 

Judith A. Enck, 

Acting Regional Administrator, Region II. 

■ Part 52, chapter I, title 40 of the Code 

of Federal Regulations is amended as 

follows: 

PART 52—[AMENDED] 

■ 1. The authority citation for part 52 

continues to read as follows: 

Authority: 42 U.S.C. 7401 et seq. 

Subpart H—Connecticut 

■ 2. Section 52.379 is amended by 

redesignating the introductory 

paragraph as paragraph (a) and adding 

a new paragraph (b) to read as follows: 

§ 52.379 Control strategy: PM2.5. 

(a) * * * 

(b) Determination of Attainment. EPA 

has determined, as of December 15, 

2010, that the New York-Northern New 

Jersey-Long Island, NY-NJ-CT fine 

particle (PM2.5) nonattainment area has 

attained the 1997 PM2.5 National 

Ambient Air Quality Standard. This 

determination, in accordance with 40 

CFR 51.1004(c), suspends the 

requirements for this area to submit an 

attainment demonstration, associated 

reasonably available control measures, a 

reasonable further progress plan, 

contingency measures, and other 

planning SIPs related to attainment of 

the standard for as long as the area 

continues to attain the 1997 PM2.5

NAAQS. 

Subpart FF—New Jersey 

■ 3. Section 52.1602 is amended by 

adding new paragraph (c) to read as 

follows: 

§ 52.1602 Control strategy and 

regulations: PM2.5. 

* * * * * 

(c) Determination of Attainment. EPA 

has determined, as of December 15, 

2010, that the New York-Northern New 

Jersey-Long Island, NY-NJ-CT fine 

particle (PM2.5) nonattainment area has 

attained the 1997 PM2.5 National 

Ambient Air Quality Standard. This 

determination, in accordance with 40 

CFR 51.1004(c), suspends the 

requirements for this area to submit an 

attainment demonstration, associated 

reasonably available control measures, a 

reasonable further progress plan, 

contingency measures, and other 

planning SIPs related to attainment of 

the standard for as long as the area 

continues to attain the 1997 PM2.5

NAAQS. 

Subpart HH—New York 

■ 4. Section 52.1678 is amended by 

adding new paragraph (e) to read as 

follows: 

§ 52.1678 Control strategy and 

regulations: Particulate matter. 

* * * * * 

(e) Determination of Attainment. EPA 

has determined, as of December 15, 

2010, that the New York-Northern New 

Jersey-Long Island, NY-NJ-CT fine 

particle (PM2.5) nonattainment area has 

attained the 1997 PM2.5 National 

Ambient Air Quality Standard. This 

determination, in accordance with 40 

CFR 51.1004(c), suspends the 

requirements for this area to submit an 

attainment demonstration, associated 

reasonably control available measures, a 

reasonable further progress plan, 

contingency measures, and other 

planning SIPs related to attainment of 

the standard for as long as the area 

continues to attain the 1997 PM2.5

NAAQS. 

[FR Doc. 2010–28504 Filed 11–12–10; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 447 

[CMS–2238–F2] 

RIN 0938–AP67 

Medicaid Program; Withdrawal of 

Determination of Average 

Manufacturer Price, Multiple Source 

Drug Definition, and Upper Limits for 

Multiple Source Drugs 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule withdraws two 

provisions from the ‘‘Medicaid Program; 

Prescription Drugs’’ final rule (referred 

to hereafter as ‘‘AMP final rule’’) 

published in the July 17, 2007 Federal 

Register. The provisions we are 

withdrawing are as follows: The 

determination of average manufacturer 

price, and the Federal upper limits for 

multiple source drugs. We are also 

withdrawing the definition of ‘‘multiple 

source drug’’ as it was revised in the 

‘‘Medicaid Program; Multiple Source 

Drug Definition’’ final rule published in 

the October 7, 2008 Federal Register. 

DATES: Effective Date: These regulations 

are effective on December 15, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Wendy Tuttle, (410) 786–8690. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On September 3, 2010, we published 

a proposed rule (75 FR 54073) in the 

Federal Register to withdraw two 

provisions from the ‘‘Medicaid Program; 

Prescription Drugs’’ final rule published 

in the July 17, 2007 Federal Register (72 

FR 39142) (referred to hereafter as ‘‘AMP 

final rule’’). The provisions we proposed 

to withdraw are as follows: 

• Section 447.504 ‘‘Determination of 

AMP.’’ 

• Section 447.514 ‘‘Upper limits for 

multiple source drugs.’’ 

We also proposed to withdraw the 

definition of ‘‘multiple source drug’’ as 

it was revised in the ‘‘Medicaid Program; 

Multiple Source Drug Definition’’ final 

rule published in the October 7, 2008 

Federal Register (73 FR 58491). 

The AMP final rule, published in the 

July 17, 2007 Federal Register (72 FR 

39142), implemented sections 6001(a) 

through (d), 6002, and 6003 of the 

Deficit Reduction Act of 2005 (Pub. L. 

109–171, enacted on February 8, 2006) 

(DRA) as well as codified parts of 


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section 1927 of the Social Security Act 

(the Act) that pertain to requirements for 

drug manufacturers’ calculation and 

reporting of AMP and best price, and 

revised existing regulations that set 

FULs for certain covered outpatient 

drugs. The AMP final rule also 

implemented section 1903(i)(10) of the 

Act, as revised by the DRA with regard 

to the denial of FFP in expenditures for 

certain physician administered drugs. 

Finally, the AMP final rule addressed 

other provisions of the Medicaid Drug 

Rebate Program. 

On November 7, 2007, a complaint 

was filed with the United States District 

Court for the District of Columbia by the 

National Association of Chain Drug 

Stores (NACDS) and the National 

Community Pharmacists Association 

(NCPA) (collectively, the Plaintiffs), 

which alleged that the AMP final rule 

unlawfully changed the methodology by 

which pharmacies are reimbursed for 

dispensing prescription drugs to 

Medicaid patients. On December 19, 

2007, the Court issued a preliminary 

injunction which prohibits CMS from 

‘‘[u]ndertaking any and all action to 

implement the AMP Rule to the extent 

such action affects Medicaid 

reimbursement rates for retail 

pharmacies under the Medicaid 

program,’’ and, subject to certain 

exceptions, prohibits CMS from 

‘‘[p]osting any AMP data on a public 

Web site or otherwise disclosing any 

AMP data to any individual or entities.’’ 

The preliminary injunction, however, 

does not enjoin implementation of the 

AMP final rule as it relates to the 

calculation of rebates for the Medicaid 

rebate program, or the disclosure of 

AMP data to States as necessary for the 

administration of that program. 

In response to this litigation, CMS 

published an interim final rule with 

comment period on March 14, 2008, 

followed by a final rule on October 7, 

2008 to revise the definition of multiple 

source drug to better conform to the 

statutory definition of ‘‘multiple source 

drug’’ found in section 1927(k)(7) of the 

Act, and to inform the public of the 

procedures and practices the Agency 

would follow to ensure compliance with 

those statutory provisions. The 

Plaintiffs, however, amended their filing 

with the Court contending that the 

revised multiple source drug definition 

and implementation procedures 

remained inconsistent with the statute. 

On July 15, 2008, the Medicare 

Improvements for Patients and 

Providers Act of 2008 (Pub. L. 110–275) 

(MIPPA) was enacted. Section 203 of 

MIPPA prohibited HHS from imposing 

FULs prior to October 1, 2009 for 

multiple source drugs under 

§ 447.514(b) as published in the July 17, 

2007 AMP final rule. In accordance with 

MIPPA, CMS resumed publishing FULs 

for multiple source drugs using the 

methodology in § 447.332 as in effect on 

December 31, 2006. The methodology in 

§ 447.332 applied through September 

30, 2009. 

As a result of the lawsuit, and 

subsequent preliminary injunction, 

CMS has been enjoined from 

implementing the AMP-based FULs that 

the DRA had required. However, 

manufacturers were not affected by the 

injunction and continue to calculate and 

report AMP for the purpose of Medicaid 

rebates, in accordance with the 

determination of AMP as specified in 

the AMP final rule. 

Section 2503(a) of the Patient 

Protection and Affordable Care Act 

(Affordable Care Act) (Pub. L. 111–148, 

enacted on March 23, 2010), amends 

section 1927(e) of the Act by revising 

the Federal upper reimbursement limit 

to be no less than 175 percent of the 

weighted average (determined on the 

basis of utilization) of the most recently 

reported monthly AMPs for 

pharmaceutically and therapeutically 

equivalent multiple source drug 

products that are available for purchase 

by retail community pharmacies on a 

nationwide basis. It also amends section 

1927(k) of the Act by revising the 

definitions of AMP and multiple source 

drug. In addition, it adds to section 

1927(k) of the Act definitions of the 

terms ‘‘retail community pharmacy’’ and 

‘‘wholesaler,’’ and eliminates the term 

‘‘retail pharmacy class of trade.’’ The 

amendments made by section 2503(a) of 

the Affordable Care Act, as amended by 

section 1101(c) of the Health Care and 

Education Reconciliation Act (Pub. L. 

111–152, enacted on March 30, 2010) 

and section 202 of the FAA Air 

Transportation Modernization and 

Safety Improvement Act (Pub. L. 111– 

226, enacted on August 10, 2010), were 

effective October 1, 2010. 

II. Provisions of the Proposed 

Regulations 

In the proposed rule published on 

September 3, 2010, we proposed the 

following revisions to the AMP final 

rule published on July 17, 2007: 

• Section 447.504, ‘‘Determination of 

AMP,’’ should be withdrawn in its 

entirety; 

• Section 447.514, ‘‘Upper limits for 

multiple source drugs,’’ should be 

withdrawn in its entirety; and 

• The definition of ‘‘multiple source 

drug’’ in § 447.502, ‘‘Definitions’’ (as it 

was amended by the Multiple Source 

Drug rule published on October 7, 

2008), should be withdrawn. 

We proposed that the terms ‘‘average 

manufacturer price’’ and ‘‘multiple 

source drug’’ be defined in accordance 

with section 1927 of the Act, including 

changes made by section 2503 of the 

Affordable Care Act, as amended by the 

Health Care and Education 

Reconciliation Act, and the FAA Air 

Transportation Modernization and 

Safety Improvement Act. In particular, 

drug manufacturers would be advised to 

base their AMP calculations on the 

definitions set forth in section 1927 of 

the Act, instead of on the AMP and 

AMP-related definitions provided in 

existing regulations and guidance. 

Additionally, we proposed to revise 

three sections within the AMP final rule 

that make reference to the sections being 

proposed for withdrawal. Section 

447.510 ‘‘Requirements for 

manufacturers,’’ makes reference to 

§ 447.504 ‘‘Determination of AMP,’’ and 

§ 447.512 ‘‘Drugs: Aggregate upper limits 

for payment,’’ and § 447.518 ‘‘State plan 

requirements,’’ make reference to 

§ 447.514 ‘‘Upper limits for multiple 

source drugs. We proposed conforming 

regulatory amendments to those 

sections. 

III. Analysis of and Responses to Public 

Comments 

We received 16 comments in response 

to the September 3, 2010 proposed rule. 

We received comments from drug 

manufacturers, membership 

organizations, law firms, pharmacy 

benefit managers, a consulting firm, and 

a not-for-profit organization. A summary 

of the issues and our responses follow: 

General Comments 

Comment: Many commenters 

expressed general support for the 

provisions of the proposed rule. One 

commenter commended the agency’s 

withdrawal proposal and commitment 

to develop regulations that will 

implement provisions of section 2503 of 

the Affordable Care Act. Another 

commenter stated that they believe it is 

appropriate that CMS withdraw these 

sections of the regulation as Congress 

recently amended several sections of 

section 1927 in the Affordable Care Act. 

One commenter applauded the Agency 

for moving forward with withdrawing 

the provisions of the AMP final rule as 

well as the Multiple Source Drug rule. 

Response: We appreciate the 

comments in support of the withdrawal 

of the determination of AMP and the 

upper limits for multiple source drugs 

provisions as well as the withdrawal of 

the definition of multiple source drug. 

CMS is committed to developing further 

regulations that will provide the 

necessary guidance to all parties 


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impacted by the revisions made to the 

Medicaid Drug Rebate Program by the 

Affordable Care Act. 

Definition of Bona fide Service Fees 

Comment: We received several 

comments regarding the definition of 

bona fide service fees. A few 

commenters indicated the need for CMS 

to ensure that when it promulgates new 

regulations to implement the changes 

made by the Affordable Care Act, it 

seeks stakeholder input and provides 

further clarity on the treatment of bona 

fide service fees for the purposes of 

AMP reporting. Two commenters 

expressed concern that in the proposed 

rule, CMS did not propose to withdraw 

the definition of bona fide service fee. 

These commenters recommended that 

CMS also withdraw the definition of 

bona fide service fee to be consistent 

with the definition of bona fide service 

fee enacted by the Affordable Care Act. 

Other commenters recommended that 

despite the change the Affordable Care 

Act makes to the definition of bona fide 

service fee, the existing definition 

should remain intact and unchanged. 

One commenter noted that the language 

in the Affordable Care Act presupposes 

a background definition of bona fide 

service fees that would be applied to the 

named fees and any others paid by a 

manufacturer. Another commenter 

recommended that CMS provide 

clarification on how manufacturers 

should evaluate the language in the 

Affordable Care Act to be consistent 

with the historical definition. 

Response: We appreciate the 

comments pertaining to bona fide 

service fees. At this time, we believe it 

would be inappropriate to withdraw the 

definition of bona fide service fee from 

the AMP final rule because the 

definition of bona fide service fee that 

is in § 447.502 ‘‘Definitions’’ was 

intended to apply to both AMP and best 

price calculations. While the 

Determination of AMP (§ 447.504) is 

being withdrawn, at this time, no 

change is being made to the 

Determination of Best Price (§ 447.505). 

Therefore, we see no need to withdraw 

the definition of bona fide service fees. 

We do note, however, that the definition 

of bona fide service fee at § 447.502 

should not be used in the calculation of 

AMP. Issues related to the Affordable 

Care Act’s treatment of bona fide service 

fees will be addressed in future 

rulemaking. 

Definition of Multiple Source Drug 

Comment: We received a few 

comments on the definition of ‘‘multiple 

source drug.’’ One commenter indicated 

that an accurate definition of ‘‘multiple 

source drug’’ is critical to the 

implementation of the provisions of the 

Affordable Care Act. Two commenters 

stated that CMS should allow for public 

review and comment on a definition for 

what constitutes a ‘‘multiple source 

drug’’ that is available for purchase by 

retail community pharmacies on a 

nationwide basis. 

Response: CMS continues to believe 

that the definition of ‘‘multiple source 

drug’’ in § 447.502 should be withdrawn 

in light of changes to the relevant 

statutory language in the Affordable 

Care Act. In the absence of Federal 

guidance or regulation, manufacturers 

should rely on section 1927(k)(7) of the 

Act, as amended by the Affordable Care 

Act, for the definition of ‘‘multiple 

source drug.’’ 

Withdrawal of Determination of AMP 

(§ 447.504) 

Comment: We received one comment 

indicating support for the position that 

AMP continue to be calculated using the 

current regulation (42 CFR 

447.504(g)(1)). This commenter 

indicated that if CMS were to change 

the definition of AMP and therefore 

require manufacturers to purchase data 

from wholesalers in order to calculate 

AMP, it would be a substantial burden 

and expense and could result in less 

accurate data. 

Response: CMS interpreted this 

comment to mean the commenter 

disagreed with the withdrawal of 

§ 447.504 in its entirety since the 

commenter specifically mentioned 

§ 447.504(g)(1) in support of continuing 

to calculate AMP using the current 

regulation. We appreciate this comment, 

but in light of the changes in relevant 

statutory language, CMS continues to 

believe that withdrawing § 447.504 in 

its entirety is the appropriate action at 

this time. 

Monthly AMP Calculations 

Comment: One commenter suggested 

that CMS modify the quarterly AMP 

calculation requirement under 

§ 447.504(i)(2) by eliminating the 

requirement that manufacturers report 

monthly AMP for single source drugs. 

Response: In light of the changes in 

relevant statutory language made by the 

Affordable Care Act, we continue to 

believe it is necessary to withdraw all of 

§ 447.504 at this time. In addition, we 

are not making further changes to the 

monthly AMP reporting requirements in 

this final rule. 

Quarterly AMP Calculations 

Comment: One commenter requested 

that CMS confirm the methodology for 

calculating quarterly AMPs stating that 

the proposed rule would delete the 

current provision (42 CFR 

§ 447.504(i)(2)) that provides that the 

‘‘[q]uarterly AMP is calculated as a 

weighted average of the monthly AMPs 

in the quarter.’’ This commenter 

requested clarification on whether 

manufacturers should continue to 

calculate quarterly AMPs as a function 

of the monthly AMPs or whether a 

separate calculated quarterly AMP 

would be permitted or required. 

Response: CMS recognizes that with 

the deletion of § 447.504 Determination 

of AMP, manufacturers will have 

questions regarding the calculation of 

AMP, including monthly and quarterly 

AMP calculations. Manufacturers 

should rely on the statutory language 

found at section 1927(k)(1) of the Act, 

as amended by the Affordable Care Act, 

and regulations (except those 

regulations or portions thereof have 

been withdrawn). 

Customary Prompt Pay Discounts 

Comment: We received a few 

comments regarding the definition of 

‘‘customary prompt pay discounts.’’ One 

commenter noted that the removal of 

§ 447.504 would remove the definition 

of ‘‘customary prompt pay discounts’’ 

and would therefore create ambiguity as 

to whether a discount is customary. The 

commenter suggested that the definition 

of ‘‘customary prompt pay discounts’’ 

should remain in the regulation. 

Another commenter requested that CMS 

confirm that when it issues future 

regulations, it does not intend to change 

the definition of ‘‘customary prompt pay 

discounts,’’ which the proposed rule 

would withdraw. 

Response: Given the amendments 

made by the Affordable Care Act, we 

continue to believe that withdrawing 

§ 447.504 in its entirety is the 

appropriate action at this time. We do 

expect to address this issue in future 

rulemaking. Until such time as those 

rules are issued and finalized, 

manufacturers should operate consistent 

with the Medicaid drug rebate statute, 

and regulations (except those 

regulations or portions thereof that have 

been withdrawn). 

Reasonable Assumptions 

Comment: We received one comment 

asking if the proposed regulation was 

designed to change the reasonable 

assumption option provided to 

manufacturers in the AMP final rule. 

The commenter went on to request that 

CMS confirm that manufacturers’ 

reasonable assumptions may include 

assumptions based on the current AMP 

regulations to the extent that those 


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69594 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 

regulations do not appear inconsistent 

with the statutory changes. 

Response: We wish to remind 

manufacturers that they may not rely on 

regulatory provisions and language that 

have been withdrawn. Until a 

subsequent rule is issued and finalized, 

manufacturers should rely on section 

1927 of the Act, as amended by the 

Affordable Care Act, and regulations 

(except those regulations or portions 

thereof that have been withdrawn). 

Base Date AMP Recalculation 

Comment: A few commenters noted 

that CMS revised the language in the 

regulatory text of § 447.510(c), 

pertaining to a manufacturer’s 

recalculation of the base date AMP. One 

commenter suggested that CMS should 

take this opportunity to amend 

§ 447.510(c)(1) by removing the notation 

‘‘[OFR: Insert publication date of the 

final rule]’’ and specify when these 

recalculations will be permitted in light 

of the evolving definition of AMP. 

Another commenter thought that the 

revision implied that manufacturers 

could submit revised base date AMPs on 

a product-by-product basis. A third 

commenter suggested that 

manufacturers be allowed a one-time 

restatement of AMP in order to have a 

more accurate comparison between base 

AMP and the current AMP. 

Response: As indicated in the 

proposed rule, CMS proposed 

conforming regulatory amendments to 

§§ 447.510, 447.512, and 447.518 as 

these sections made specific references 

to the provisions being proposed for 

withdrawal. It would have been 

inappropriate to keep these references to 

§§ 447.504 and 447.514 since they 

would no longer exist in the regulatory 

text. By changing the references to 

section 1927 of the Act, CMS did not 

address whether manufacturers could 

restate base date AMPs. The reference to 

section 1927 of the Act merely replaces 

the references to the withdrawn 

regulatory text. As to the comment that 

CMS take this opportunity to replace the 

notation with the date when the 

recalculations would be permitted, 

while we appreciate the comment, 

taking such action would be outside the 

scope of the proposed rule. 

Lagged Price Concessions 

Comment: We received one comment 

expressing confusion over whether the 

proposed rule, if finalized, would delete 

the regulatory language on the AMP 

rolling average methodology for lagged 

price concessions that currently appears 

as 42 CFR 447.510(d)(2). Specifically, 

this commenter questioned whether the 

proposed rule would delete all of 

current 42 CFR 447.510(d)(2) and 

replace it with a single sentence, or 

whether it is just the first sentence being 

replaced and the rolling average 

provision would remain intact. The 

commenter recommended that CMS 

retain the current rolling average 

provision in the regulations as this 

approach has worked well to date and 

is consistent with the Affordable Care 

Act smoothing process. The commenter 

further stated that during the first year 

under the new AMP definition, 

manufacturers would like confirmation 

from CMS that they may choose 

whether to blend pre-ACA lagged price 

concessions with post-ACA lagged price 

concessions. 

Response: We appreciate the 

commenter’s concern about the 

methodology previously described in 

§ 447.510(d)(2) regarding the calculation 

of monthly AMP. We have decided to 

revise the first sentence of this 

paragraph as stated in the proposed rule 

and delete the remaining sentences. We 

will address this issue in future 

rulemaking. 

Regulatory Impact Statement 

Comment: We received one comment 

regarding CMS’ determination that this 

is not an economically significant rule. 

The commenter expressed concern that 

CMS indicated that the proposed rule 

will not have a significant impact on a 

substantial number of small entities. 

The commenter went on to share their 

view that withdrawing parts of the 

existing regulation will undoubtedly 

help maintain the economic viability of 

some community retail pharmacies, but 

remained concerned regarding CMS’ 

implementation of the Affordable Care 

Act. 

Response: This final rule withdraws 

regulatory provisions that have been 

superseded by the Affordable Care Act. 

In light of the new provisions 

established by the Affordable Care Act, 

we do not expect that this final rule will 

have any significant economic effects on 

small business entities. Therefore, CMS 

continues to believe this is not an 

economically significant rule. 

Issues Not Addressed in the Proposed 

Rule 

We received several comments on 

issues that were not addressed in the 

proposed rule. Many of the comments 

were in regards to the implementation 

of the Affordable Care Act. A summary 

of these comments is provided below. 

However, CMS does wish to clarify that 

while we appreciate the comments 

provided and recognize that the changes 

made by the Affordable Care Act are far 

reaching, the comments that follow are 

outside the scope of this proposed rule. 

CMS plans on issuing a proposed 

regulation addressing the Affordable 

Care Act provisions. 

Effective Date of Affordable Care Act 

Changes to AMP and FULs 

Comment: One commenter indicated 

that manufacturers will have to 

implement changes to AMP calculations 

beginning in October 2011 rather than 

October 2010. 

Response: We wish to remind all 

interested parties, as noted in the 

‘‘Background’’ section of this final rule, 

that the new statutory definition of AMP 

went into effect as of October 1, 2010. 

Manufacturers should rely on the 

statute, as revised by the Affordable 

Care Act, in calculating AMP. 

Implementation of New AMP Definition 

Comment: We received a number of 

comments regarding the changes the 

Affordable Care Act makes to the 

definition and determination of AMP. 

Several commenters expressed concern 

about the implementation of the new 

Affordable Care Act definition when 

CMS has yet to complete the rulemaking 

process. These commenters requested 

that CMS delay the implementation of 

the new requirements until such time as 

further guidance is provided. One 

commenter encouraged CMS to provide 

sub-regulatory guidance prior to the 

issuance of regulations, while another 

commenter indicated that CMS should 

not issue sub-regulatory guidance as it 

could result in ongoing revisions to 

AMP calculations. This commenter 

stated that manufacturers should be 

provided the ability to make the 

necessary reasonable assumptions for 

AMP calculations until official 

regulations are published. Some 

commenters provided specific 

recommendations as to how CMS 

should define AMP, while other 

commenters encouraged CMS to seek 

stakeholder input as to how to interpret 

the statute regarding which entities are 

to be included and excluded from the 

calculation of AMP, as well as the 

planned implementation schedule. One 

commenter specifically requested that 

CMS ensure that PBM rebates be 

excluded from AMP. Another 

commenter requested that a smoothing 

process be implemented for discounts to 

minimize the potential fluctuations in 

AMP from month to month. One 

commenter stated that AMP calculations 

should be consistent with both Average 

Sales Price (ASP) and Non-Federal 

Average Manufacturer Price (NonFAMP) for the VA. 

Response: While we appreciate these 

comments and suggestions, they raise 


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Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69595 

issues that we believe are outside the 

scope of the proposed rule and will not 

be addressed in this final rule. CMS 

does expect to issue proposed 

regulations addressing the Affordable 

Care Act provisions. 

Federal Upper Limit (FULs) 

Comment: We received comments 

regarding the implementation of the 

Federal Upper Limit (FUL) 

requirements. Several commenters 

encouraged CMS to delay the 

implementation of the new FULs 

requirement for multiple source drugs 

until a more precise definition of AMP 

is available. One commenter specifically 

recommended at least a 60-day 

transition between the issuance of a 

final regulation to implement the 

Affordable Care Act and the effective 

date of such regulation. A few 

commenters wanted to ensure that CMS 

would provide clear guidance that a 

FUL will be calculated when three or 

more therapeutically and 

pharmaceutically equivalent multiple 

source drug products are available for 

purchase by retail community 

pharmacies on a nationwide basis. 

Several commenters recommended that 

CMS develop a methodology to 

determine when it would be appropriate 

to exceed 175 percent of AMP when 

calculating a FUL. One commenter 

suggested that CMS develop a formal 

mechanism to appeal FULs in certain 

cases. A few commenters suggested that 

CMS establish a process to permit more 

frequent changes in a FUL or the 

suspension of a FUL, if it were 

warranted. 

Response: This proposed rule does 

not address the implementation of the 

Affordable Care Act; and while we 

appreciate these comments, they raise 

issues that are outside the scope of the 

proposed rule and will not be addressed 

in this final rule. CMS does intend to 

issue a proposed regulation addressing 

the Affordable Care Act provisions. 

Inhalation, Infusion, Instilled, 

Implanted and Injectable Drugs 

Comment: CMS received a number of 

comments regarding the statutory 

amendment passed by Congress in 

August 2010 as part of Public Law 111– 

226 that addressed inhalation, infusion, 

instilled, implanted and injectable drugs 

that are not generally dispensed through 

retail community pharmacies. A few 

commenters stated that the 

Congressional intent of this amendment 

was to provide CMS with the authority 

to continue collecting rebates for these 

drugs that are not generally dispensed 

through a retail community pharmacy 

and was not intended to impact 

reimbursement to retail community 

pharmacies. Several commenters 

provided CMS with suggestions on how 

to define the phrase ‘‘not generally 

dispensed.’’ Others commented that 

manufacturers need interpretive 

guidance in determining which of these 

drugs are not generally dispensed by a 

retail community pharmacy. One 

commenter suggested that CMS publish 

a list of drugs that meet the statutory 

definition of inhalation, infusion, 

instilled, implanted and injectable 

drugs. A few commenters indicated that 

CMS should exercise its discretionary 

authority to increase the FUL of these 

drugs, while others commented that a 

FUL should not be calculated for these 

drugs under any circumstances. 

Response: While CMS appreciates 

these comments, the topic of inhalation, 

infusion, instilled, implanted and 

injectable drugs is beyond the scope of 

the proposed rule and will not be 

addressed in this final rule. CMS plans 

to issue a proposed regulation 

addressing these provisions of the 

Affordable Care Act. 

340B Drug Prices 

Comment: CMS received several 

comments regarding the impact of the 

AMP calculation on the discounted drug 

prices that 340B covered entities 

receive. One commenter urged that CMS 

coordinate with the Health Resources 

and Services Administration (HRSA) 

with respect to the application of the 

new AMP definition to 340B price 

calculations and to ensure that the new 

definition of AMP is used to calculate 

340B ceiling prices as HRSA uses AMP 

data to calculate the 340B drug prices. 

CMS received a few comments in regard 

to the relationship between 340B drug 

prices and the amendment to the statute 

regarding inhalation, infusion, instilled, 

implanted and injectable drugs. One 

commenter stated that calculating AMP 

for these types of drugs based solely on 

retail community pharmacies’ prices 

would have had a devastating impact on 

340B discount prices of Factor 

Replacement Product (FRP) because 

only about 1 percent to 2 percent of FRP 

is distributed through retail community 

pharmacies. Another commenter stated 

that calculating AMP by taking into 

account discounts and rebates provided 

to non-retail pharmacies is important for 

340B entities because the use of retail 

pricing alone would distort 340B price 

calculations. 

Response: While we appreciate these 

comments, the topic of 340B drug 

pricing is outside the scope of the 

proposed rule and therefore will not be 

addressed in this final rule. 

Adequate Documentation 

Comment: CMS received several 

comments regarding the use of the 

phrase ‘‘adequate documentation’’ in 

§ 447.504(g)(1), which states that sales 

to wholesalers are to be included in the 

calculation of AMP unless the 

manufacturer has adequate 

documentation showing the drugs are 

subsequently resold to an excluded 

entity as specified in paragraph (h). A 

few commenters recommended that 

CMS reverse this provision and instead 

provide guidance to manufacturers that 

sales and discounts should be excluded 

from AMP calculations unless the 

manufacturers have adequate 

documentation to show that the sales 

and discounts fit the statute’s definition 

of AMP. Other commenters expressed 

support for retaining the current 

language. One commenter claimed that 

this language has worked well to date in 

promoting stability of AMP calculations 

and is not inconsistent with new 

statutory provisions. This commenter 

further stated that this language poses 

no risk of creating adverse consequences 

for pharmacies that serve Medicaid 

beneficiaries and would be unlikely to 

decrease FULs inappropriately. Another 

commenter stated that the Affordable 

Care Act seems to remain silent on this 

issue and recommends that the current 

language remain in effect in future 

regulations. One commenter supports 

the current language as a better 

approach than requiring manufacturers 

to generate or purchase data necessary 

to calculate an AMP that includes 

wholesaler sales, only if resale to a retail 

community pharmacy is documented. 

Response: While we appreciate these 

comments, they are outside the scope of 

the proposed rule and therefore will not 

be addressed in this final rule, except to 

emphasize that § 447.504, including 

paragraph (g)(1), is being withdrawn by 

this final rule. 

Authorized Generics 

Comment: We received a few 

comments requesting CMS provide 

clarification regarding manufacturers 

with authorized generics. Two 

commenters requested that CMS 

confirm that transactions related to the 

transfer of authorized generics to 

secondary manufacturers that resell to 

community pharmacies are to be treated 

as wholesalers and therefore should be 

included in AMP. Another commenter 

stated that with the broader definition of 

wholesaler it is unclear whether 

authorized generics manufacturers 

would be considered in AMP. 

Response: These comments are 

outside the scope of the proposed rule 


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69596 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 

and will not be addressed in this final 

rule. However, CMS does wish to clarify 

that while the definition of ‘‘wholesaler’’ 

as defined in § 447.504 of the AMP final 

rule will no longer exist, the Affordable 

Care Act does provide a new definition 

of wholesaler. Therefore, in the absence 

of regulatory guidance, manufacturers 

should refer to the statute, as revised by 

the Affordable Care Act. CMS does 

intend to issue a proposed regulation 

addressing the changes made by the 

Affordable Care Act. 

Definitions of Retail Community 

Pharmacy and Wholesaler 

Comment: We received comments 

regarding definitions that were revised 

or introduced in the Affordable Care 

Act. One commenter noted that an 

accurate definition of ‘‘retail community 

pharmacy’’ is critical to the 

implementation of the provisions within 

the Affordable Care Act. Another 

commenter recommended that CMS 

provide a table providing a specific 

breakdown of what is considered to be 

a retail community pharmacy. A few 

commenters indicated that CMS should 

revise the definition of ‘‘wholesaler’’ to 

be consistent with the new statutory 

definition of wholesaler. One 

commenter stated that an accurate 

definition of ‘‘wholesaler’’ is critical to 

the implementation of these new 

provisions. 

Response: We appreciate these 

comments; however, they are outside 

the scope of the proposed rule and will 

not be addressed in this final rule. In the 

absence of regulatory guidance, 

interested parties should rely on the 

statute, as revised by the Affordable 

Care Act. CMS intends to issue a 

proposed regulation addressing the 

changes made by the Affordable Care 

Act. 

Other Comments 

Comment: We received comments 

requesting guidance on Line Extension 

Drugs, Medicaid Managed Care 

Organizations (MCOs), and State 

invoices to manufacturers. One 

commenter requested guidance on the 

implementation of the new 

requirements for calculating rebates for 

line extension drugs. This commenter 

noted that Release 81 provided guidance 

on how to perform the calculation and 

price comparison but it did not provide 

a useful interpretation of the term. 

Another commenter requested guidance 

regarding the implementation of the 

new statutory requirement, which 

requires that rebates to be collected on 

prescriptions paid by Medicaid MCOs. 

The commenter stated that companies 

will need data from CMS on the number 

of Medicaid beneficiaries enrolled in 

MCOs with pharmacy benefits to be able 

to verify prescription data. Additionally, 

this commenter had concerns regarding 

MCOs and 340B drugs and stated that 

the new statutory requirements for 

rebates on prescriptions paid by 

Medicaid MCOs creates the likelihood 

that double discounts could be imposed 

on manufacturers unless CMS makes it 

clear that such utilization may not be 

reported to Medicaid. One commenter 

raised concerns with a manufacturer’s 

obligation to pay rebates on claims that 

are paid primarily by a non-Medicaid 

payor, where Medicaid is a secondary 

payor. This commenter was particularly 

interested in having CMS clarify that 

States may not invoice a manufacturer 

for more than 100 percent of the amount 

paid by the State associated with a drug 

claim. 

Response: While we appreciate the 

comments, they are outside the scope of 

the proposed rule and will not be 

addressed in this final rule. However, 

CMS does wish to remind all interested 

parties that in the absence of regulatory 

guidance, they should refer to the 

statute as amended by the Affordable 

Care Act. 

Retail Price Survey and Publication of 

AMP Data 

Comment: We received one comment 

regarding the retail price survey which 

indicated that it would be important for 

CMS to only publish weighted average 

Retail Price Survey (RPS) data for 

multiple source drugs subject to the 

FUL and only include reimbursement 

paid to community retail pharmacies. 

Another commenter recommended that 

CMS review several months of the 

weighted AMP data before making it 

public. 

Response: The issues raised in these 

comments are outside the scope of the 

proposed rule and will not be addressed 

in this final rule. 

IV. Provisions of the Final Regulations 

This final rule incorporates the 

provisions of the September 3, 2010 

proposed rule. 

V. Collection of Information 

Requirements 

This document does not impose any 

new reporting, recordkeeping, or 

disclosure requirements. The burden 

associated with the existing reporting 

requirements contained in § 447.510(a) 

is currently approved under OCN: 

0938–0578. 

VI. Regulatory Impact Statement 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (March 

22, 1995; Pub. L. 104–4), Executive 

Order 13132 on Federalism (August 4, 

1999) and the Congressional Review Act 

(5 U.S.C. 804(2)). 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This regulatory action 

withdraws those regulatory provisions 

that have been superseded by the 

Affordable Care Act. In light of the new 

provisions established by the Affordable 

Care Act, we do not expect that this 

final rule will have any significant 

economic effects. Therefore, this final 

rule is not considered an economically 

significant rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We are not preparing an analysis 

for the RFA because the Secretary has 

determined that this final rule will not 

have a significant economic impact on 

a substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area for 

Medicare payment regulations and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because the Secretary has 

determined that this final rule will not 

have a significant impact on the 


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Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69597 

operations of a substantial number of 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2010, that threshold is approximately 

$135 million. This rule will not have 

consequential effect on State, local, or 

tribal governments or on the private 

sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programs— 

health, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, Rural 

areas. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 447—PAYMENT FOR SERVICES 

■ 1. The authority citation for part 447 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

Subpart I—Payment for Drugs 

■ 2. Section 447.502 is amended by 

removing the definition of ‘‘multiple 

source drug.’’ 

§ 447.504 [Removed and reserved] 

■ 3. Section 447.504 is removed and 

reserved. 

■ 4. Section 447.510 is amended by— 

■ A. Republishing paragraph (a) 

introductory text. 

■ B. Revising paragraphs (a)(1), (c)(2)(i), 

and (d)(2). 

The revisions read as follows: 

§ 447.510 Requirements for 

manufacturers. 

(a) Quarterly reports. A manufacturer 

must report product and pricing 

information for covered outpatient 

drugs to CMS not later than 30 days 

after the end of the rebate period. The 

quarterly pricing report must include: 

(1) AMP, calculated in accordance 

with section 1927(k)(1) of the Social 

Security Act. 

* * * * * 

(c) * * * 

(2) * * * 

(i) A manufacturer’s recalculation of 

the base date AMP must only reflect the 

revisions to AMP as provided for in 

section 1927(k)(1) of the Social Security 

Act. 

* * * * * 

(d) * * * 

(2) Calculation of monthly AMP. 

Monthly AMP should be calculated 

based on section 1927(k)(1) of the Social 

Security Act, except the period covered 

should be based on monthly, as opposed 

to quarterly AMP sales. 

* * * * * 

■ 5. Section 447.512 is amended by— 

■ A. Removing and reserving paragraph 

(a). 

■ B. Revising the introductory text of 

paragraph (b). 

■ C. Revising paragraph (c). 

The revisions read as follows: 

§ 447.512 Drugs: Aggregate upper limits of 

payment. 

(a) [Reserved] 

(b) Other drugs. The agency payments 

for brand name drugs certified in 

accordance with paragraph (c) of this 

section and drugs other than multiple 

source drugs for which a specific limit 

has been established must not exceed, 

in the aggregate, payments levels that 

the agency has determined by applying 

the lower of the—. 

* * * * * 

(c) Certification of brand name drugs. 

(1) The upper limit for payment for 

multiple source drugs for which a 

specific limit has been established does 

not apply if a physician certifies in his 

or her own handwriting (or by an 

electronic alternative means approved 

by the Secretary) that a specific brand is 

medically necessary for a particular 

recipient. 

(2) The agency must decide what 

certification form and procedure are 

used. 

(3) A check-off box on a form is not 

acceptable but a notation like ‘‘brand 

necessary’’ is allowable. 

(4) The agency may allow providers to 

keep the certification forms if the forms 

will be available for inspection by the 

agency or HHS. 

§ 447.514 [Removed and reserved] 

■ 6. Section 447.514 is removed and 

reserved. 

■ 7. Section 447.518 is amended by 

revising paragraphs (b)(1)(i) and (b)(2) to 

read as follows: 

§ 447.518 State plan requirements, 

findings and assurances. 

* * * * * 

(b) * * * 

(1) * * * 

(i) In the aggregate, its Medicaid 

expenditures for multiple source drugs 

are in accordance with the established 

upper limits. 

* * * * * 

(2) Assurances. The agency must 

make assurances satisfactory to CMS 

that the requirements set forth in 

§ 447.512 of this subpart concerning 

upper limits and in paragraph (b)(1) of 

this section concerning agency findings 

are met. 

* * * * * 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.778, Medical 

Assistance Program). 

Dated: October 20, 2010. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: November 3, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–28649 Filed 11–9–10; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 679 

[Docket No. 0910131363–0087–02] 

RIN 0648–XA038 

Fisheries of the Exclusive Economic 

Zone Off Alaska; Pacific Cod in the 

Bering Sea and Aleutian Islands 

Management Area 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Temporary rule; closure. 

SUMMARY: NMFS is prohibiting retention 

of Pacific cod in the Bering Sea and 

Aleutian Islands Management Area 

(BSAI) by vessels participating in the 

Amendment 80 limited access fisheries. 

This action is necessary to prevent 

exceeding the 2010 total allowable catch 

(TAC) of Pacific cod in the BSAI. 

DATES: Effective 1200 hrs, Alaska local 

time (A.l.t.), November 9, 2010, through 

2400 hrs, A.l.t., December 31, 2010. 


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