GAO-03-1157R 

United States General Accounting Office

Washington, DC 20548 

B-292824 

September 15, 2003 

The Honorable Charles E. Grassley 

Chairman 

The Honorable Max Baucus 

Ranking Minority Member 

Committee on Finance 

United States Senate 

The Honorable W.J. “Billy” Tauzin 

Chairman 

The Honorable John D. Dingell 

Ranking Minority Member 

Committee on Energy and Commerce 

House of Representatives 

Subject: Department of Health and Human Services, Centers for Medicare and 

Medicaid Services: Medicaid Program; Time Limitation on Price 

Recalculations and Recordkeeping Requirements Under the Drug Rebate 

Program

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a 

major rule promulgated by the Department of Health and Human Services, Centers 

for Medicare and Medicaid Services (CMS), entitled “Medicaid Program; Time 

Limitation on Price Recalculations and Recordkeeping Requirements Under the Drug 

Rebate Program” (RIN: 0938-AM20). We received the rule on September 4, 2003. It 

was published in the Federal Register as a final rule on August 29, 2003. 68 Fed. Reg. 

51912. 

The final rule establishes new recordkeeping requirements for drug manufacturers 

under the Medicaid drug rebate program and sets a 3-year time limitation during 

which manufacturers must report changes to average manufacturer price and best 

price for purposes of reporting data to CMS. 

The final rule has an announced effective date of October 1, 2003. The 

Congressional Review Act requires a 60-day delay in the effective date of a major 

rule from the date of publication in the Federal Register or receipt of the rule by 

Congress, whichever is later. 5 U.S.C. 801(a)(3)(A). As noted above, the rule was 

published on August 29, 2003, and was received by Congress on September 4, 2003. 

Therefore, the rule does not have the required delay in its effective date. 
Page 2 GAO-03-1157R 

Enclosed is our assessment of the CMS’s compliance with the procedural steps 

required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. 

Our review indicates that, with the exception of the 60-day delay in the effective 

date, the CMS complied with the applicable requirements. 

If you have any questions about this report, please contact James W. Vickers, 

Assistant General Counsel, at (202) 512-8210. The official responsible for GAO 

evaluation work relating to the subject matter of the rule is William Scanlon, 

Managing Director, Health Care. Mr. Scanlon can be reached at (202) 512-7114. 

 signed 

Kathleen E. Wannisky 

Managing Associate General Counsel 

Enclosure 

cc: Ann Stallion 

Regulations Coordinator 

Department of Health and 

 Human Services 
GAO-03-1157R 

ENCLOSURE 

ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE 

ISSUED BY THE 

DEPARTMENT OF HEALTH AND HUMAN SERVICES, 

CENTERS FOR MEDICARE AND MEDICAID SERVICES 

ENTITLED 

"MEDICAID PROGRAM; TIME LIMITATION ON PRICE RECALCULATIONS AND 

RECORDKEEPING REQUIREMENTS UNDER THE DRUG REBATE PROGRAM" 

(RIN: 0938-AM20) 

(i) Cost-benefit analysis

CMS estimates that the final rule will save $90 million annually over the next 5 years 

($50 million in federal savings and $40 million in state savings). 

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605, 

607, and 609

CMS has certified that the final rule will not have a significant economic impact on a 

substantial number of small entities. 

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform 

Act of 1995, 2 U.S.C. §§ 1532-1535

The final rule does not contain either an intergovernmental or private sector 

mandate, as defined in title II, of more than $110 million in any one year. 

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. 

The final rule was issued using the notice and comment procedures found at 5 U.S.C. 

553. On September 19, 1995, a Notice of Proposed Rulemaking was published in the 

Federal Register. 60 Fed. Reg. 48442. In response to the proposal, 19 comments 

were received and the comments pertaining to the provisions of the final rule are 

discussed in the preamble. 

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520 

The information collection requirements of the final rule have already been approved 

by the Office of Management and Budget (OMB) and assigned OMB No. 0938-0578. 
Page 2 GAO-03-1157R 

Statutory authorization for the rule 

The final rule is promulgated under the authority contained in section 1102 of the 

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

Executive Order No. 12866 

The final rule was reviewed by OMB and found to be an “economically significant” 

regulatory action under the order. 

Executive Order No. 13132 (Federalism) 

The final rule does not have sufficient federalism implications to warrant the 

preparation of a Federalism Assessment.