Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 17935 

Dated: March 31, 2004. 

Ann C. Agnew, 

Executive Secretary to the Department. 

[FR Doc. 04–7716 Filed 4–1–04; 11:57 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 414 

[CMS–1380–IFC] 

RIN 0938–AN05 

Medicare Program; Manufacturer 

Submission of Manufacturer’s Average 

Sales Price (ASP) Data for Medicare 

Part B Drugs and Biologicals 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period will implement the 

provisions of the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003 (MMA) related to the 

calculation and submission of 

manufacturer’s average sales price (ASP) 

data on certain Medicare Part B drugs 

and biologicals to CMS by 

manufacturers. 

DATES: Effective date: These regulations 

are effective on April 30, 2004. 

Comment date: Comments will be 

considered if we receive them at the 

appropriate address, as provided below, 

no later than 5 p.m. on June 7, 2004. 

ADDRESSES: In commenting, please refer 

to file code CMS–1380–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

Submit electronic comments to http: 

//www.cms.hhs.gov/regulations/ 

ecomments or to http:// 

www.regulations.gov. Mail written 

comments (one original and three 

copies) to the following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1380–

IFC, P.O. Box 8010, Baltimore, MD 

21244–1850. 

Please allow sufficient time for mailed 

comments to be timely received in the 

event of delivery delays. 

If you prefer, you may deliver (by 

hand or courier) your written comments 

(one original and three copies) to one of 

the following addresses: Room 445–G, 

Hubert H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201, or Room C4–26–

05, 7500 Security Boulevard, Baltimore, 

MD 21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for commenters wishing to 

retain a proof of filing by stamping in 

and retaining an extra copy of the 

comments being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

could be considered late. 

All comments received before the 

close of the comment period are 

available for viewing by the public, 

including any personally identifiable or 

confidential business information that is 

included in a comment. After the close 

of the comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public website. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Marjorie Baldo, (410) 786–0548. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1380–IFC 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: 

Comments received timely will be 

available for public inspection as they 

are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

call telephone number: (410) 786–7197. 

I. Background 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘BACKGROUND’’ at the 

beginning of your comments.] 

Section 303(c) of the MMA amends 

Title XVIII of the Social Security Act 

(the Act) by adding new section 1847A. 

This new section establishes the use of 

the ASP methodology for payment for 

drugs and biologicals described in 

section 1842(o)(1)(C) of the Act 

furnished on or after January 1, 2005. 

For calendar quarters beginning on or 

after January 1, 2004, the statute 

requires manufacturers to report 

manufacturer’s ASP data to CMS for 

Medicare Part B drugs and biologicals 

paid under sections 1842(o)(1)(D), 

1847A, or 1881(b)(13)(A)(ii) of the Act. 

Manufacturers are required to submit 

their initial quarterly ASP data to us 

beginning April 30, 2004. Subsequent 

reports are due not later than 30 days 

after the last day of each calendar 

quarter. The types of Medicare Part B 

covered drugs and biologicals paid 

under sections 1842(o)(1)(D), 1847A, or 

1881(b)(13)(A)(ii) of the Act include 

drugs furnished incident to a 

physician’s service, drugs furnished 

under the durable medical equipment 

(DME) benefit, certain oral anti-cancer 

drugs, and oral immunosuppressive 

drugs. 

All Medicare Part B covered drugs 

and biologicals paid under sections 

1842(o)(1)(D), 1847A, or 

1881(b)(13)(A)(ii) of the Act are subject 

to the ASP reporting requirements. 

Certain drugs and biologicals, for 

example, radiopharmaceuticals, are not 

paid under these sections of the Act and 

will not be subject to the ASP reporting 

requirements. 

We are issuing this interim final rule 

with comment period in order to allow 

us to implement the manufacturer ASP 

reporting requirement of section 

303(i)(4) of the MMA within the time 

frames established by the MMA. 

Therefore, effective April 30, 2004, this 

interim final rule with comment period 

will provide implementation guidelines 

for manufacturers to submit their ASP 

data to us. We expect to publish a 

proposed rule on the 2005 ASP based 

payment system later this year. 

II. Provisions of the Interim Final Rule 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Provisions of the Interim Final 

Rule’’ at the beginning of your 

comments.] 

In this interim final rule with 

comment period, we are adding a new 

subpart J (Submission of Manufacturer’s 

Average Sales Price Data) to Part 414 

that implements section 

1927(b)(3)(A)(iii) of the Act by 

specifying the requirements for 

submission of a manufacturer’s ASP 

data for certain drugs and biologicals 

covered under Part B of Title XVIII of 

the Act that are paid under sections 

1847A, 1842(o)(1)(D), or 

1881(b)(13)(A)(ii) of the Act. 

17936 Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 

A. Calculation of ASP Data 

New section 1847A(c)(1) of the Act 

defines the manufacturer’s ASP for a 

National Drug Code (NDC) associated 

with a drug or biological to be the 

manufacturer’s sales to all purchasers in 

the United States (excluding units 

associated with sales exempted below) 

for the NDC for a quarter divided by the 

total number of units of that NDC sold 

by the manufacturer in that quarter 

(excluding units associated with sales 

exempted below). Section 

1847A(c)(6)(A) of the Act adopts the 

definition of ‘‘manufacturer’’ set forth in 

section 1927(k)(5) of the Act. In that 

section, the term ‘‘manufacturer’’ means 

any entity that is engaged in the 

following (This term does not include a 

wholesale distributor of drugs or a retail 

pharmacy licensed under State law): 

• Production, preparation, 

propagation, compounding, conversion 

or processing of prescription drug 

product, 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. 

• Packaging, repackaging, labeling, 

relabeling, or distribution of 

prescription drug products. 

(Manufacturers that also engage in 

wholesaler activities are required to 

report ASP data for those drugs that 

they manufacture.) 

In performing this calculation, 

manufacturers must use the NDC at the 

standardized 11-digit level. For the 

purposes of the ASP calculation, the 

‘‘unit’’ is the product represented by the 

11-digit NDC as defined in section 

1847A(b)(2)(B) of the Act. In other 

words, the denominator is the total 

number of the ASP applicable sales of 

that NDC. 

B. Sales Exempted From ASP 

Calculation Other Than Nominal Sales 

Section 1847A(c)(2)(A) of the Act 

requires that in calculating the 

manufacturer’s ASP, a manufacturer 

must exclude sales that are exempt from 

the Medicaid best price calculation 

under sections 1927(c)(1)(C)(i) and 

1927(c)(1)(C)(ii)(III) of the Act. 

C. Sales to an Entity That Are Nominal 

in Amount Are Exempted From the ASP 

Calculation 

Section 1847A(c)(2)(B) of the Act 

requires that sales to an entity that are 

nominal in amount are to be exempted 

from the ASP calculation. Sales to an 

entity that are nominal in amount are 

defined for purposes of section 

1927(c)(1)(C)(ii)(III) of the Act for the 

Medicaid drug rebate program in the 

Medicaid drug rebate agreement. 

D. Inclusion of Rebates and Other Price 

Concessions in the ASP Calculation 

1. General Rule 

Section 1847A(c)(3) of the Act 

requires that in calculating the 

manufacturer’s ASP, a manufacturer 

must include volume discounts, prompt 

pay discounts, cash discounts, free 

goods that are contingent on any 

purchase requirement, chargebacks, and 

rebates (other than rebates under the 

Medicaid drug rebate program). 

2. Estimation Methodology 

a. Use of the Most Recent 12-Month 

Period Available 

Section 1847A(c)(5)(A) of the Act 

states that the ASP is to be calculated by 

the manufacturer on a quarterly basis. 

To the extent that data on volume 

discounts, prompt pay discounts, cash 

discounts, free goods that are contingent 

on any purchase requirement, 

chargebacks, and rebates are available 

on a lagged basis, the manufacturer is 

required to apply a methodology based 

on the most recent 12-month period 

available to estimate costs attributable to 

these price concessions. Specifically, a 

manufacturer should add the volume 

discounts, prompt pay discounts, cash 

discounts, free goods that are contingent 

on any purchase requirement, 

chargebacks, and rebates for the most 

recent 12-month period available and 

divide by 4 to determine the estimate to 

apply in calculating the manufacturer’s 

ASP for the quarter being submitted. 

b. Allocation to Individual NDCs 

For situations in which a 

manufacturer is unable to associate 

volume discounts, prompt pay 

discounts, cash discounts, free goods 

that are contingent on any purchase 

requirement, chargebacks and rebates, 

with a specific NDC, the manufacturer 

will allocate those discounts, rebates, 

free goods, and chargebacks to 

associated NDCs. This association will 

be based on the percentage of sales (in 

dollars) attributable to each particular 

NDC within the group of NDCs for 

which the manufacturer can associate 

discounts, rebates, free goods, and 

chargebacks. 

c. Future Changes to the Methodology 

As we gain more experience with the 

ASP system, we may seek to change the 

methodology to estimate costs 

attributable to rebates and chargebacks 

and the scope of price concessions for 

years after 2004. Pursuant to section 

1847A(c)(5)(A) of the Act, the Secretary 

may establish a uniform methodology to 

estimate and apply those costs. For 

years after 2004, the Secretary may 

include in the calculation of the ASP, 

other price concessions which may be 

based upon recommendations of the 

Inspector General that would result in a 

reduction of the cost to the purchaser. 

E. Reporting of ASP Data to CMS 

1. Format 

Manufacturers must report the ASP 

data to us in Microsoft Excel using the 

template provided in Addendum A. 

Manufacturers are required to calculate 

and report the ASP information to us at 

the 11-digit NDC level, along with the 

associated units used in the calculation 

of the ASP. As we gain more experience 

with the ASP system, we may seek to 

modify these requirements in the future. 

2. Contacts 

As indicated in Addendum B, 

manufacturers must submit the names 

of one or more individuals that we may 

contact if we have questions or issues 

with respect to the data submission. 

3. Certification by the Chief Executive 

Officer or Chief Financial Officer 

Due to the consequences of failing to 

submit accurate and timely ASP data, 

each quarterly ASP data submission 

must be certified by one of the 

following: the manufacturer’s Chief 

Executive Officer (CEO), the 

manufacturer’s Chief Financial Officer 

(CFO), or an individual who has 

delegated authority to sign for, and who 

reports directly to, the manufacturer’s 

CEO or CFO. 

F. Penalties Associated With the Failure 

To Submit Timely and Accurate ASP 

Data 

Section 1847A(d)(4) of the Act 

specifies the penalties for 

misrepresentations associated with ASP 

data. If the Secretary determines that a 

manufacturer has made a 

misrepresentation in the reporting of 

ASP data, a civil money penalty in an 

amount of up to $10,000 may be applied 

for each price misrepresentation and for 

each day in which the price 

misrepresentation was applied. Section 

1927 of the Act, as amended by section 

303(i)(4) of the MMA, specifies the 

penalties associated with a 

manufacturer’s failure to submit timely 

information or the submission of false 

information. 

III. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 17937 

respond to the comments in the 

preamble to that document. 

IV. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

the proposed rule. The notice of 

proposed rulemaking includes a 

reference to the legal authority under 

which the rule is proposed, and the 

terms and substances of the proposed 

rule or a description of the subjects and 

issues involved. This procedure can be 

waived, however, if an agency finds 

good cause that a notice-andcommentprocedure is impracticable, 

unnecessary, or contrary to the public 

interest and incorporates a statement of 

the finding and its reasons in the rule 

issued. In addition, the Administrative 

Procedure Act normally requires a 30- 

day delay in the effective date of a final 

rule. Furthermore, the Congressional 

Review Act generally requires an agency 

to delay the effective date of a major 

rule by 60-days in order to allow for 

congressional review of the agency 

action. Section 1871 of the Act provides 

for publication of a notice of proposed 

rulemaking and opportunity for public 

comment before CMS issues a final rule. 

However, section 1871(b)(2)(B) of the 

Act provides an exception when a law 

establishes a specific deadline for 

implementation of a provision and the 

deadline is less than 150 days after the 

law’s date of enactment. The MMA was 

enacted by Congress on November 25, 

2003, and signed into law by the 

President on December 8, 2003. The 

provisions of this interim final rule with 

comment period are required to be 

implemented by April 30, 2004. 

Therefore, these provisions are subject 

to waiver of proposed rulemaking and 

public comment in accordance with 

section 1871(b)(2)(B) of the Act. 

Even if section 1871(b)(2)(B) of the 

Act were not directly applicable here, 

we would find good cause to waive the 

requirement for publication of a notice 

of proposed rulemaking and public 

comment on the grounds that it is 

impracticable, unnecessary, and 

contrary to the public interest. This 

interim final rule with comment period 

sets forth non-discretionary provisions 

of MMA with respect to the calculation 

and submission of ASP data for certain 

Medicare Part B drugs and biologicals. 

Because the rule is generally ministerial, 

we believe that pursuing notice and 

comment is unnecessary. Moreover, 

because that process would delay the 

implementation of congressionallymandated submissions of drug paymentrelated data, we find that pursuing that 

process would be both impracticable 

and contrary to the public interest. 

With respect to the requirement of a 

60-day delay in the effective date of any 

final rule pursuant to the Congressional 

Review Act (CRA), see 5 U.S.C. section 

801, the CRA provides that the 60-day 

delayed effective date shall not apply to 

any rule ‘‘which an agency for good 

cause finds * * * that notice and public 

procedure thereon are impracticable, 

unnecessary, or contrary to the public 

interest.’’ (5 U.S.C. section 808(2)). For 

the reasons set forth above, we believe 

that additional notice and comment 

rulemaking on this subject would be 

impracticable, unnecessary, or contrary 

to the public interest. Therefore, we do 

not believe that the CRA requires a 60- 

day delay in the effective date of this 

interim final rule with comment period. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 

notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are, however, requesting an 

emergency review of the information 

collection referenced below. In 

compliance with the requirement of 

section 3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995, we have 

submitted to the Office of Management 

and Budget (OMB) the following 

requirements for emergency review. We 

are requesting an emergency review 

because the collection of this 

information is needed before the 

expiration of the normal time limits 

under OMB’s regulations at 5 CFR Part 

1320. This is necessary to ensure 

compliance with a statutory deadline. 

We cannot reasonably comply with the 

normal clearance procedures because of 

an unanticipated event. 

CMS is requesting OMB review and 

approval of this collection by April 23, 

2004, with a 180-day approval period. 

Written comments and 

recommendations will be accepted from 

the public if received by the individuals 

designated below by April 16, 2004. 

During this 180-day period, we will 

publish a separate Federal Register 

notice announcing the initiation of an 

extensive 60-day agency review and 

public comment period on these 

requirements. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements: 

In summary, this interim final rule 

with comment period requires 

manufacturers of Medicare Part B 

covered drugs and biologicals paid 

under sections 1847A, 1842(o)(1)(D), or 

1881(b)(13)(A)(ii) of the Act to submit 

manufacturer’s quarterly ASP data to 

CMS beginning April 30, 2004. This 

interim final rule with comment period 

lays out the requirements and provides 

the template manufacturers should use 

to report their ASP data to CMS. 

The burden associated with the 

requirements in this rule is the time and 

effort required by manufacturers of 

Medicare Part B drugs and biologicals to 

prepare and submit the required data to 

CMS. We estimate that it will take 

approximately 4 hours for each 

submission. We also estimate that this 

requirement will affect approximately 

120 manufacturers. Therefore, we 

estimate the total reporting burden to be 

approximately 480 hours per quarter for 

a total of 1920 hours annually. 

As required by section 3504(h) of the 

Paperwork Reduction Act of 1995, we 

have submitted a copy of this document 

to OMB for its review of these 

information collection requirements. 

If you comment on these information 

collection and recordkeeping 

requirements, please mail copies 

directly to the following: Centers for 

Medicare & Medicaid Services, Office of 

Strategic Operations and Regulatory 

Affairs, Regulations Development and 

Issuances Group, Attn: Dawn 

Willinghan, CMS–1380–IFC, Room C5–

14–03, 7500 Security Boulevard, 

Baltimore, MD 21244–1850; and Office 

of Information and Regulatory Affairs, 

Office of Management and Budget, 

Room 10235, New Executive Office 

Building, Washington, DC 20503, Attn: 

Brenda Aguilar, CMS Desk Officer, 

baguilar@omb.eop.gov. Fax (202) 395–

6974. 

VI. Regulatory Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

17938 Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 

Flexibility Act (RFA) (September 16, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132. 

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 rule does not reach 

the economic threshold and thus is not 

considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 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 we have determined that 

this 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 for final 

rules 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 and has fewer than 100 

beds. We are not preparing an analysis 

for section 1102(b) of the Act because 

we have determined that this rule will 

not have a significant impact on the 

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 that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. While 

this interim final rule with comment 

period does implement a new statutory 

data reporting requirement for drug 

manufacturers, the costs associated with 

this requirement are expected to be 

below the $110 million annual 

threshold established by section 202 of 

the Unfunded Mandates Reform Act. 

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 E.O. 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 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

Chapter IV, as set forth below: 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 1. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1881(b)(1) 

of the Social Security Act (42 U.S.C. 1302, 

1395hh, and 1395rr(b)(1)). 

■ 2. Part 414 is amended by adding a 

new subpart J to read as follows: 

Subpart J—Submission of 

Manufacturer’s Average Sales Price 

Data 

Sec. 

414.800 Purpose. 

414.802 Definitions. 

414.804 Basis of payment. 

414.806 Penalties associated with the 

failure to submit timely and accurate 

ASP data. 

§ 414.800 Purpose. 

This subpart implements section 

1847A of the Act by specifying the 

requirements for submission of a 

manufacturer’s average sales price data 

for certain drugs and biologicals covered 

under Part B of Title XVIII of the Act 

that are paid under sections 

1842(o)(1)(D), 1847A, and 

1881(b)(13)(A)(ii) of the Act. 

§ 414.802 Definitions. 

As used in this subpart, unless the 

context indicates otherwise—

Drug means both drugs and 

biologicals. 

Manufacturer means any entity that is 

engaged in the following (This term 

does not include a wholesale distributor 

of drugs or a retail pharmacy licensed 

under State law): 

(1) 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. 

(2) The packaging, repackaging, 

labeling, relabeling, or distribution of 

prescription drug products. 

Unit means the product represented 

by the 11-digit National Drug code. 

§ 414.804 Basis of payment. 

(a) Calculation of manufacturer’s 

average sales price. 

(1) The manufacturer’s average sales 

price for a quarter for a drug or 

biological represented by a particular 

11-digit National Drug Code must be 

calculated as the manufacturer’s sales to 

all purchasers in the United States for 

that particular 11-digit National Drug 

Code (after deducting the types of items 

and transactions listed in paragraph 

(a)(2) of this section and excluding sales 

referenced in paragraph (a)(4) of this 

section) divided by the total number of 

units sold by the manufacturer in that 

quarter (after excluding units associated 

with sales referenced in paragraph (a)(4) 

of this section). 

(2) In calculating the manufacturer’s 

average sales price, a manufacturer must 

deduct the following types of 

transactions and items: 

(i) Volume discounts. 

(ii) Prompt pay discounts. 

(iii) Cash discounts. 

(iv) Free goods that are contingent on 

any purchase requirement. 

(v) Chargebacks and rebates (other 

than rebates under the Medicaid drug 

rebate program). 

(3) To the extent that data on volume 

discounts, prompt pay discounts, cash 

discounts, free goods that are contingent 

on any purchase requirement, 

chargebacks and rebates (other than 

rebates under the Medicaid drug rebate 

program) are available on a lagged basis, 

the manufacturer should add the data 

for the most recent 12-month period 

available and divide by 4 to determine 

the estimate to apply in calculating the 

manufacturer’s average sales price for 

the quarter being submitted. 

(4) In calculating the manufacturer’s 

average sales price, a manufacturer must 

exclude sales that are exempt from the 

Medicaid best price calculation under 

sections 1927(c)(1)(C)(i) and 

1927(c)(1)(C)(ii)(III) of the Act. 

Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 17939 

(5) The manufacturer’s average sales 

price must be calculated by the 

manufacturer every calendar quarter 

and submitted to CMS within 30 days 

of the close of the quarter. The first 

quarter submission must be submitted 

by April 30, 2004. Subsequent reports 

are due not later than 30 days after the 

last day of each calendar quarter. 

(6) Each report must be certified by 

one of the following: 

(i) The manufacturer’s Chief 

Executive Officer (CEO). 

(ii) The manufacturer’s Chief 

Financial Officer (CFO). 

(iii) An individual who has delegated 

authority to sign for, and who reports 

directly to, the manufacturer’s CEO or 

CFO. 

§ 414.806 Penalties associated with the 

failure to submit timely and accurate ASP 

data. 

Section 1847A(d)(4) specifies the 

penalties associated with 

misrepresentations associated with ASP 

data. If the Secretary determines that a 

manufacturer has made a 

misrepresentation in the reporting of 

ASP data, a civil money penalty in an 

amount of up to $10,000 may be applied 

for each price misrepresentation and for 

each day in which the price 

misrepresentation was applied. Section 

1927(b)(3)(C) of the Act, as amended by 

section 303(i)(4) of the MMA, specifies 

the penalties associated with a 

manufacturer’s failure to submit timely 

information or the submission of false 

information. 

(Catalog of Federal Domestic Assistance 

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program) 

Dated: March 4, 2004. 

Dennis G. Smith, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 23, 2004. 

Tommy G. Thompson, 

Secretary. 

BILLING CODE 4120–01–P 

17940 Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 


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Federal Register / Vol. 69, No. 66 / Tuesday, April 6, 2004 / Rules and Regulations 17941 

[FR Doc. 04–7715 Filed 4–1–04; 11:24 am] 

BILLING CODE 4120–01–C 

FEDERAL MARITIME COMMISSION 

46 CFR Part 515 

[Docket No. 04–02] 

Optional Rider for Proof of Additional 

NVOCC Financial Responsibility 

AGENCY: Federal Maritime Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Maritime 

Commission amends its regulations 

governing proof of financial 

responsibility for ocean transportation 

intermediaries to allow an optional rider 

to be filed with a licensed non-vesseloperating common carrier’s proof of 

financial responsibility to provide 

additional proof of financial 

responsibility for such carriers serving 

the U.S. oceanborne trade with the 

People’s Republic of China. 

EFFECTIVE DATE: April 6, 2004. 

FOR FURTHER INFORMATION CONTACT: 

Amy W. Larson, General Counsel, 

Federal Maritime Commission, 800 

North Capitol Street, NW., Room 1018, 

Washington, DC 20573–0001, (202) 523–

5740, E-mail: GeneralCounsel@fmc.gov. 

Sandra A. Kusumoto, Director, Bureau 

of Consumer Complaints and Licensing, 

Federal Maritime Commission, 800 

North Capitol Street, NW., Room 970, 

Washington, DC 20573–0001, (202) 523–

5787, E-mail: otibonds@fmc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This rulemaking proceeding was 

initiated on January 23, 2004, with the 

issuance by the Federal Maritime 

Commission (‘‘FMC’’ or ‘‘Commission’’) 

of a Notice of Proposed Rulemaking 

(‘‘NPR’’). 69 FR 4271 (January 29, 2004). 

Comments on the NPR were to be due 

on February 20, 2004, but requests for 


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