Document ID: ./input/supremecourt_opinions/opinions/22pdf/21-1326_6jfl.pdf
Page Number: 6.0

Cite as:  598 U. S. ____ (2023) 

3 

Opinion of the Court 

Medicare,  which  provides  federally  funded  health  insur-
ance coverage to individuals who are 65 or older or who are
disabled, see 42 U. S. C. §1395 et seq. 

As relevant here, States’ Medicaid plans may offer outpa-
tient  prescription-drug  coverage  to  qualifying individuals.
§1396d(a)(12).  However, the Federal Centers for Medicare 
and Medicaid Services (CMS) has promulgated regulations
that  limit  the  amount  these  programs  may  reimburse  for 
certain  drugs.    See  42  CFR  §447.512(b)(2)  (2021).    Those 
regulations  limit  any  reimbursement  to  the  lower  of  two 
amounts, one of which is the healthcare provider’s “usual
and customary charges [for the drug] to the general public.” 
Ibid.  State Medicaid agencies likewise typically reimburse 
pharmacies  for  the  lowest  of  different  amounts,  one  of 
which  is  often  the  pharmacy’s  “usual  and  customary 
charge” to the public.  See CMS, Medicaid Covered Outpa-
tient  Prescription  Drug  Reimbursement  Information  by 
State,  Quarter  Ending  September  2022  (Nov.  16,  2022), 
https://www.medicaid.gov/medicaid/prescription-drugs/
state-prescription-drug-resources/medicaid-covered-
outpatient-prescription-drug-reimbursement-information-
state/index.html.

Through  Medicare  Part  D,  the  Government  also  offers
prescription-drug coverage to beneficiaries.  See 42 U. S. C. 
§1395w–101  et seq.;  42  CFR  pt.  423.    To  administer  that 
coverage, CMS awards contracts to private plan sponsors.
See  42  U. S. C.  §1395w–115;  42  CFR  §§423.315,  423.329. 
Those plan sponsors, in turn, enter contracts with pharma-
cies (sometimes through middlemen called pharmacy bene-
fit managers).  Many of the contracts at issue here limited 
any reimbursement to the pharmacy’s “usual and custom-
ary” price.

The bottom line is that, when respondents submitted re-
imbursement  claims  to  these  entities,  they  often  were  re-
quired to charge and disclose their “usual and customary”