and program evaluations, investigations, and audits 
that are similar to the terms and conditions for re-
bate agreements under paragraphs (3) and (4) of 
section 1927(b). 
‘‘(3) REBATE FOR REBATE ELIGIBLE MEDICARE 
DRUG PLAN ENROLLEES.— 
‘‘(A) IN GENERAL.—The amount of the re-
bate specified under this paragraph for a manu-
facturer for a rebate period, with respect to 
each dosage form and strength of any covered 
part D drug provided by such manufacturer 
and dispensed to a rebate eligible individual, 
shall be equal to the product of— 
‘‘(i) the total number of units of such 
dosage form and strength of the drug so 
provided and dispensed for which payment 
was made by a PDP sponsor or an MA or-
ganization under this part for the rebate 
period, including payments passed through 
the low-income and reinsurance subsidies 
under sections 1860D–14 and 1860D– 
15(b), respectively; and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the Medicaid rebate amount 
(as defined in subparagraph (B)) for 
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such form, strength, and period; ex-
ceeds 
‘‘(II) the average Medicare drug 
program rebate eligible rebate amount 
(as defined in subparagraph (C)) for 
such form, strength, and period. 
‘‘(B) MEDICAID
REBATE
AMOUNT.—For 
purposes of this paragraph, the term ‘Medicaid 
rebate amount’ means, with respect to each 
dosage form and strength of a covered part D 
drug provided by the manufacturer for a rebate 
period— 
‘‘(i) in the case of a single source 
drug or an innovator multiple source drug, 
the 
amount 
specified 
in 
paragraph 
(1)(A)(ii)(II) or (2)(C) of section 1927(c) 
plus the amount, if any, specified in sub-
paragraph (A)(ii) of paragraph (2) of such 
section, for such form, strength, and pe-
riod; or 
‘‘(ii) in the case of any other covered 
outpatient drug, the amount specified in 
paragraph (3)(A)(i) of such section for 
such form, strength, and period. 
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‘‘(C) AVERAGE MEDICARE DRUG PROGRAM 
REBATE ELIGIBLE REBATE AMOUNT.—For pur-
poses of this subsection, the term ‘average 
Medicare drug program rebate eligible rebate 
amount’ means, with respect to each dosage 
form and strength of a covered part D drug 
provided by a manufacturer for a rebate period, 
the sum, for all PDP sponsors under part D 
and MA organizations administering an MA– 
PD plan under part C, of— 
‘‘(i) the product, for each such spon-
sor or organization, of— 
‘‘(I) the sum of all rebates, dis-
counts, or other price concessions (not 
taking into account any rebate pro-
vided under paragraph (2) or any dis-
counts under the program under sec-
tion 1860D–14A) for such dosage 
form and strength of the drug dis-
pensed, calculated on a per-unit basis, 
but only to the extent that any such 
rebate, discount, or other price con-
cession applies equally to drugs dis-
pensed to rebate eligible Medicare 
drug plan enrollees and drugs dis-
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pensed to PDP and MA–PD enrollees 
who are not rebate eligible individuals; 
and 
‘‘(II) the number of the units of 
such dosage and strength of the drug 
dispensed during the rebate period to 
rebate eligible individuals enrolled in 
the prescription drug plans adminis-
tered by the PDP sponsor or the MA– 
PD plans administered by the MA or-
ganization; divided by 
‘‘(ii) the total number of units of such 
dosage and strength of the drug dispensed 
during the rebate period to rebate eligible 
individuals enrolled in all prescription drug 
plans administered by PDP sponsors and 
all MA–PD plans administered by MA or-
ganizations. 
‘‘(D) USE OF ESTIMATES.—The Secretary 
may establish a methodology for estimating the 
average Medicare drug program rebate eligible 
rebate amounts for each rebate period based on 
bid and utilization information under this part 
and may use these estimates as the basis for 
determining the rebates under this section. If 
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the Secretary elects to estimate the average 
Medicare drug program rebate eligible rebate 
amounts, the Secretary shall establish a rec-
onciliation process for adjusting manufacturer 
rebate payments not later than 3 months after 
the date that manufacturers receive the infor-
mation 
collected 
under 
section 
1860D– 
12(b)(7)(B). 
‘‘(4) LENGTH OF AGREEMENT.—The provisions 
of paragraph (4) of section 1927(b) (other than 
clauses (iv) and (v) of subparagraph (B)) shall apply 
to rebate agreements under this subsection in the 
same manner as such paragraph applies to a rebate 
agreement under such section. 
‘‘(5) OTHER
TERMS
AND
CONDITIONS.—The 
Secretary shall establish other terms and conditions 
of the rebate agreement under this subsection, in-
cluding terms and conditions related to compliance, 
that are consistent with this subsection. 
‘‘(6) DEFINITIONS.—In this subsection and sec-
tion 1860D–12(b)(7): 
‘‘(A) REBATE ELIGIBLE INDIVIDUAL.—The 
term ‘rebate eligible individual’ means— 
‘‘(i) a subsidy eligible individual (as 
defined in section 1860D–14(a)(3)(A)); 
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‘‘(ii) a Medicaid beneficiary treated as 
a subsidy eligible individual under clause 
(v) of section 1860D–14(a)(3)(B); and 
‘‘(iii) any part D eligible individual 
not described in clause (i) or (ii) who is de-
termined for purposes of the State plan 
under title XIX to be eligible for medical 
assistance under clause (i), (iii), or (iv) of 
section 1902(a)(10)(E). 
‘‘(B) REBATE PERIOD.—The term ‘rebate 
period’ has the meaning given such term in sec-
tion 1927(k)(8).’’. 
(b) REPORTING REQUIREMENT
FOR
THE DETER-
MINATION AND PAYMENT OF REBATES BY MANUFACTUR-
ERS RELATED TO REBATE FOR REBATE ELIGIBLE MEDI-
CARE DRUG PLAN ENROLLEES.— 
(1) REQUIREMENTS FOR PDP SPONSORS.—Sec-
tion 1860D–12(b) of the Social Security Act (42 
U.S.C. 1395w–112(b)) is amended by adding at the 
end the following new paragraph: 
‘‘(7) REPORTING REQUIREMENT FOR THE DE-
TERMINATION AND PAYMENT OF REBATES BY MANU-
FACTURERS RELATED TO REBATE FOR REBATE ELI-
GIBLE MEDICARE DRUG PLAN ENROLLEES.— 
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