§ 423.2330 Manufacturer discount payment audit and dispute resolution. ( a ) *Third-party Administration (TPA) audits.* ( 1 ) Manufacturers participating in the Discount Program may conduct periodic audits, no more often than annually, directly or through third parties as specified in this section.
( 2 ) The manufacturer must provide the TPA with 60 days notice of the reasonable basis for the audit and a description of the information required for the audit.
( 3 ) The manufacturer must have the right to audit a statistically significant sample of data and information held by the TPA that were used to determine applicable discounts for applicable drugs having NDCs with the manufacturer's FDA-assigned labeler code(s). Such data and information will be made available on-site, and with the exception of work papers, such information cannot be removed from the audit site.
( 4 ) The auditor for the manufacturer may release only an opinion of the audit results and is prohibited from releasing other information obtained from the audit, including work papers, to its client, employer, or any other party.
( b ) *Manufacturer audits.* ( 1 ) A manufacturer is subject to periodic audit by CMS no more often than annually, directly or through third parties, as specified in this section.
( 2 ) CMS provides the manufacturer with 60 days notice of the audit and a description of the information required for the audit.
( 3 ) CMS has the right to audit appropriate data, including data related to a manufacturer's FDA-assigned labeler codes, NDC last lot expiration dates, utilization, and pricing information relied on by the manufacturer to dispute quarterly invoices, and any other data CMS determines are necessary to carry out the Discount Program.
( c ) *Dispute resolution.* ( 1 ) Manufacturers may dispute applicable discounts invoiced to the manufacturer on quarterly invoices by providing notice of the dispute to the TPA in a manner specified by CMS within 60 days of receipt of the information that is the subject of the dispute.
( 2 ) Such notice must be accompanied by supporting evidence that is material, specific, and related to the dispute in a manner specified by CMS.
( 3 ) The manufacturer must not withhold any invoiced discount payments pending dispute resolution with the sole exception of invoiced amounts for applicable drugs that do not have labeler codes provided by the manufacturer to CMS in accordance with § 423.2315(b)(4). If payment is withheld in accordance with this paragraph, the manufacturer must notify the TPA and applicable Part D sponsors within 38 days of receipt of the applicable invoice that payment is being withheld for this reason.
( 4 ) If the manufacturer receives an unfavorable determination from the TPA, or the dispute is not resolved within 60 calendar days of the TPA's receipt of the notice of dispute, the manufacturer may request review by the independent review entity contracted by CMS within— ( i ) Thirty calendar days of the unfavorable determination; or
( ii ) Ninety calendar days after the TPA's receipt of the notice of dispute if dispute is not resolved within 60 days, whichever is earlier.
( 5 ) The independent review entity must make a determination within 90 calendar days of receipt of the manufacturer's request for review.
( 6 ) ( i ) CMS or a manufacturer that receives an unfavorable determination from the independent review entity may request review by the CMS Administrator within 30 calendar days of receipt of the notification of such determination.
( ii ) The decision of the CMS Administrator is final and binding.
( 7 ) CMS adjusts future invoices (or implements an alternative reimbursement process if determined necessary by CMS) if the dispute is resolved in favor of the manufacturer.
[77 FR 22172, Apr. 12, 2012, as amended at 85 FR 72909, Nov. 16, 2020]