PART 427—MEDICARE PART B DRUG INFLATION REBATE PROGRAM Authority: 42 U.S.C. 1395w-3a(i), 1302, and 1395hh. Source: 89 FR 98578, Dec. 9, 2024, unless otherwise noted. Subpart A—General Provisions § 427.10 Basis and scope. (a) Basis. (b) Scope. (c) Severability. § 427.20 Definitions. As used in this part, the following definitions apply: Allowed charges Applicable calendar quarter Applicable threshold Average sales price (ASP) Benchmark period Consumer Price Index for All Urban Consumers (CPI-U) Billing and payment code Billing unit Biosimilar biological product CPI-U Food and Drug Administration (FDA) application Final action claim First marketed date Grouped billing and payment code, Inflation-adjusted payment amount Manufacturer National Drug Code (NDC) Not Otherwise Classified (NOC) code Part B rebatable drug Payment amount benchmark quarter Payment amount in the payment amount benchmark quarter Rebate period CPI-U Single source drug or biological product Sold or marketed (1) The NDC has units reported for the rebate quarter; (2) The end marketing date is during the rebate quarter; (3) The end marketing date is after the rebate quarter; or (4) The end marketing date is missing. Specified amount Subsequently approved drug Unit [89 FR 98578, Dec. 9, 2024, as amended at 90 FR 50021, Nov. 5, 2025] Subpart B—Determination of Part B Rebatable Drugs § 427.100 Definitions. As used in this subpart, the following definitions apply: EUA Declaration Individual who uses such a drug or biological § 427.101 Identification of Part B rebatable drugs. (a) Determination of Part B rebatable drugs. (i) Identify single source drugs or biological products, including biosimilar biological products, covered under Part B; and (ii) Identify the applicable billing and payment code for each drug or biological product set forth in paragraph (a)(1)(i) of this section. (2) For a drug or biological product identified under paragraph (a)(1) of this section, CMS will determine whether the drug or biological product meets the exclusion criteria set forth in paragraph (b) or (c) of this section as of the first day of the applicable calendar quarter. (3) To determine whether a drug or biological product is a Part B rebatable drug under this section, CMS will use the most recent available data submitted to CMS by manufacturers pursuant to section 1927(b)(3)(A)(iii) of the Act or section 1847A(f)(2), as applicable, and other available data, including but not limited to information available at FDA.gov and information in drug pricing compendia, as applicable. (b) Excluded product categories. (1) Qualifying biosimilar biological products. (2) Products with historically excepted grouped billing and payment codes. (3) Products billed under a NOC code. (4) Radiopharmaceutical drugs and biological products. (5) Skin substitutes. (6) Drugs with average total allowed charges under the applicable threshold. (7) Certain vaccines and other products. (i) The vaccines as set forth in section 1861(s)(10) of the Act, which includes the influenza, pneumococcal, hepatitis B, and COVID-19 vaccines. (ii) Monoclonal antibodies used for treatment or post-exposure prophylaxis of COVID-19 that are covered and paid for under section 1861(s)(10) of the Act. This exclusion will apply to applicable quarters until the end of the calendar year in which the EUA Declaration ends. (iii) Monoclonal antibodies that are used for pre-exposure prophylaxis of COVID-19 that are covered and paid for under section 1861(s)(10) of the Act. This exclusion will apply to applicable calendar quarters even after the year in which the EUA Declaration ends, as long as after the EUA Declaration is terminated, these products have an FDA-approved application or license. (8) Generic drugs. (c) Drugs and biological products with average total allowed charges below the applicable threshold. (1) Average total allowed charges for a year per individual. (i) For single source drugs and biological products assigned to only one billing and payment code, CMS will sum the allowed charges from final action claims greater than $0 and divide the summed amount by the number of individuals who use such a drug or biological with allowed charges for this billing and payment code. (ii) For single source drugs and biological products assigned to more than one billing and payment code, CMS will sum the allowed charges from final action claims greater than $0 for all billing and payment codes and divide the summed amount by the number of individuals who use such a drug or biological with allowed charges for these billing and payment codes. (iii) For single source drugs and biological products previously crosswalked to a grouped billing and payment code: (A) If crosswalked to a grouped billing and payment code during the full year, CMS will calculate the average total allowed charges per individual per year for the drug using allowed charges and the number of individuals who used the drug or biological product based on claims for the previously grouped billing and payment code during the year. (B) If crosswalked to a grouped billing and payment code and later assigned to a unique billing and payment code for part of the year, CMS will calculate average total allowed charges per individual per year by: ( 1 ( 2 ( 3 1 2 1 2 (2) Applicable threshold. (i) For applicable calendar quarters in 2023, the applicable threshold is equal to $100. (ii) For applicable calendar quarters in 2024, the applicable threshold is equal to $100 increased by the percentage increase in the CPI-U for the 12-month period ending with June of 2023. (iii) For applicable calendar quarters in each subsequent calendar year, the applicable threshold is equal to the unrounded applicable threshold calculated for the prior calendar year increased by the percentage increase in the CPI-U for the 12-month period ending with June of the previous year. (iv) If the resulting amount under paragraphs (c)(2)(i) through (iii) of this section is not a multiple of $10, CMS will round that amount to the nearest multiple of $10. (3) Application of the threshold at the billing and payment code level. (i) For single source drugs or biological products assigned to a unique billing and payment code, CMS will exclude the assigned billing and payment code for an applicable calendar quarter if the average total allowed charges for a year per individual are less than the applicable threshold. (ii) For a single source drug or biological product that is assigned to more than one billing and payment code during a year, CMS will exclude all such assigned billing and payment codes for an applicable calendar quarter. (4) Definition of year. Subpart C—Coinsurance Adjustment and Adjusted Medicare Payment for Part B Rebatable Drugs With Price Increases Faster Than Inflation § 427.200 Definitions. As used in this subpart, inflation-adjusted beneficiary coinsurance § 427.201 Computation of beneficiary coinsurance and adjusted Medicare payment for Part B rebatable drugs with price increases faster than inflation. (a) Methodology. (b) Calculation of inflation-adjusted beneficiary coinsurance. (1) If the payment amount exceeds the inflation-adjusted payment amount, the inflation-adjusted beneficiary coinsurance is calculated by multiplying the inflation-adjusted payment amount by 0.20. (2) If the inflation-adjusted payment amount does not exceed the payment amount, the adjustment to the beneficiary coinsurance set forth in paragraph (b)(1) of this section is not applied. (3) CMS will use the published payment amount in quarterly pricing files published by CMS as the payment amount in this determination. (c) Exclusions. Subpart D—Determination of the Rebate Amount for Part B Rebatable Drugs § 427.300 Definitions. As used in this subpart, the following definitions apply: 340B Program Refundable single-dose container single-use package drug § 427.301 Calculation of the total Part B rebate amount to be paid by manufacturers. (a) Total rebate. (b) Apportionment of the Part B rebate amount. (1) Determining the total billing units sold for each NDC assigned to the billing and payment code, by multiplying the number of units reported by a manufacturer in ASP data submissions at the NDC-11 package level by the number of billing units per NDC-11 reporting unit. (2) Summing the individual manufacturer's total billing units sold during the applicable calendar quarter (for all NDCs of the manufacturer assigned to the billing and payment code). (3) Summing all manufacturers' total billing units sold during the applicable calendar quarter for all NDCs of the Part B rebatable drug assigned to the billing and payment code. (4) Dividing the resulting amount from paragraph (b)(2) of this section by the resulting amount from paragraph (b)(3) of this section. (5) Multiplying the resulting amount from paragraph (b)(4) of this section by the total rebate amount as determined under paragraph (a) of this section. (c) Apportionment of the Part B rebate amount when reported units for NDCs within a billing and payment code are missing, negative, or equal to zero. (1) When there are multiple NDCs in a grouped billing and payment code and the manufacturer-reported ASP units for all NDCs are either missing, negative, or equal to zero but there is a positive rebate amount calculated under § 427.302(a), CMS will: (i) With respect to NDCs that were sold or marketed during the applicable calendar quarter and for which all NDCs assigned to the grouped billing and payment code lack manufacturer-reported ASP data for the applicable calendar quarter, equally apportion a positive rebate amount to NDCs with missing ASP units that were sold or marketed during the applicable calendar quarter by dividing the total rebate amount for the grouped billing and payment code by the total number of NDCs sold or marketed during the applicable calendar quarter within the billing and payment code; and (ii) With respect to NDCs that were not sold or marketed during the applicable calendar quarter and lack manufacturer-reported ASP units for the applicable calendar quarter, NDCs with negative manufacturer-reported ASP units for the applicable calendar quarter, and NDCs with manufacturer-reported ASP units equal to zero for the applicable calendar quarter, apportion a $0 rebate amount to each respective NDC. If all NDCs assigned to the grouped billing and payment code are determined under this subparagraph, no rebate will be assessed for that billing and payment code. (2) When there are multiple NDCs in a grouped billing and payment code and the manufacturer-reported ASP units for some but not all NDCs assigned to the grouped billing and payment code are either missing, negative, or equal to zero but there is a positive rebate amount calculated under § 427.302(a), CMS will: (i) With respect to NDCs that were not sold or marketed during the applicable calendar quarter and lack manufacturer-reported ASP units for the applicable calendar quarter, NDCs with negative manufacturer-reported ASP units for the applicable calendar quarter, and NDCs with manufacturer-reported ASP units equal to zero for the applicable calendar quarter, apportion a $0 rebate amount to each respective NDC; (ii) With respect to NDCs that were sold or marketed during the applicable calendar quarter and lack manufacturer-reported ASP units for the applicable calendar quarter, and NDCs that were sold or marketed during the applicable calendar quarter and for which respective NDCs have positive manufacturer-reported units by, apportion rebate amounts as follows: (A) Solely for purposes of the calculation determined under this paragraph (c)(2)(ii) of this section, assign to NDCs that were sold or marketed during the applicable calendar quarter and lack manufacturer-reported ASP units for the applicable calendar quarter the number of ASP units that is equal to the lowest positive number of manufacturer reported ASP units for any NDC in the grouped billing and payment code; (B) Determine the total billing units sold for each NDC assigned to the billing and payment code, by multiplying the number of units reported by a manufacturer in ASP data submissions at the NDC-11 package level by the number of billing units per NDC-11 reporting unit; (C) With respect to all NDCs of each individual manufacturer assigned to the billing and payment code, sum the total billing units for such NDCs sold during the applicable calendar quarter; (D) Sum the total billing units sold during the applicable calendar quarter for all NDCs of the Part B rebatable drug assigned to the billing and payment code, including those assigned a ASP unit value as set forth in paragraph (c)(2)(ii)(A) of this section; (E) Divide the resulting amount from paragraph (c)(2)(ii)(C) of this section by the resulting amount from paragraph (c)(2)(ii)(D) of this section; and (F) Multiply the resulting amount from paragraph (c)(2)(ii)(E) of this section by the total rebate amount as determined under paragraph (a) of this section. § 427.302 Calculation of the per unit Part B rebate. (a) Formula for calculating the per unit Part B rebate amount. (b) Identification of the specified amount for the applicable calendar quarter. (1) Subject to paragraph (b)(2) of this section, the first applicable calendar quarter for a Part B rebatable drug shall be no earlier than the calendar quarter beginning January 1, 2023 and shall be the later of one of the following: (i) The first full calendar quarter that is at least the third calendar quarter after the payment amount benchmark quarter identified in paragraphs (c)(1) through (5) of this section. (ii) The calendar quarter beginning January 1, 2023. (2) Notwithstanding paragraph (b)(1) of this section, for a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after the effective date of the drug's assigned billing and payment code other than a NOC code, whichever is later, the first applicable calendar quarter is the first full calendar quarter that follows the payment amount benchmark quarter identified in paragraphs (c)(1) through (5) of this section. (3) If all NDCs in the billing and payment code have neither manufacturer-reported ASP nor Wholesale Acquisition Cost (WAC) price data available for the applicable calendar quarter, CMS will use WAC price data from other public sources, if available, to calculate 106 percent of WAC, which will serve as the specified amount. (c) Identification of the payment amount benchmark quarter. (1) For a Part B rebatable drug first approved or licensed by the FDA on or before December 1, 2020, and with a first marketed date on or before December 1, 2020, the payment amount benchmark quarter is the calendar quarter beginning July 1, 2021. (2) For a Part B rebatable drug first approved or licensed by the FDA after December 1, 2020, the payment amount benchmark quarter is the third full calendar quarter after a drug's first marketed date. (3) For a Part B rebatable drug first approved or licensed by the FDA on or before December 1, 2020, but with a first marketed date after December 1, 2020, the payment amount benchmark quarter is the third full calendar quarter after a drug's first marketed date. (4) Notwithstanding paragraph (c)(3) of this section, for a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, the payment amount benchmark quarter is the third full calendar quarter after the Part B rebatable drug is assigned a billing and payment code other than a NOC code. (5) If the data needed to calculate the payment amount in the payment amount benchmark quarter described in and determined under § 427.302(d)(1) are not available, CMS uses the third full calendar quarter after a drug is assigned a billing and payment code as the payment amount benchmark quarter, no earlier than the calendar quarter beginning July 1, 2021, or the third full calendar quarter after the drug's first marketed date, whichever is later. (6) For a Part B rebatable drug that is a selected drug (as defined in section 1192(c) of the Act) with respect to a price applicability period (as defined in section 1191(b)(2) of the Act), in the case of a Part B rebatable drug that is no longer considered to be a selected drug, for each applicable quarter beginning after the price applicability period with respect to the drug, the payment amount benchmark quarter is the calendar quarter beginning January 1 of the last year during the price applicability period with respect to the selected drug. (d) Identification of the payment amount in the payment amount benchmark quarter. (1) For a Part B rebatable drug, subject to paragraphs (d)(1)(i) and (ii) of this section and except as provided in paragraph (d)(2) of this section, CMS identifies the payment amount in the payment amount benchmark quarter using the published payment limit for the billing and payment code for the applicable payment amount benchmark quarter. (i) If a published payment limit is not available for the applicable payment amount benchmark quarter, CMS calculates the payment amount in the payment amount benchmark quarter using positive ASP or positive WAC data from the ASP Data Collection System. (ii) If a published payment limit is not available and neither positive ASP nor positive WAC data are available in the ASP Data Collection System, CMS calculates the payment amount in the payment amount benchmark quarter using WAC data from other public sources. (2) For a Part B rebatable drug previously billed under a grouped billing and payment code during the payment amount benchmark quarter and later billed under a unique billing and payment code, CMS will use the grouped billing and payment code payment limit as the payment amount in the payment amount benchmark quarter. (e) Identification of the benchmark period CPI-U. (1) For a Part B rebatable drug first approved or licensed by the FDA on or before December 1, 2020, and with a first marketed date on or before December 1, 2020, the benchmark period CPI-U is the CPI-U for January 2021. (2) For a Part B rebatable drug first approved or licensed by the FDA after December 1, 2020, the benchmark period CPI-U is the CPI-U for the first month of the first full calendar quarter after a drug's first marketed date. (3) Notwithstanding paragraph (e)(2) of this section, for a Part B rebatable drug first approved or licensed by FDA on or before December 1, 2020, and with a first marketed date after December 1, 2020, the benchmark period CPI-U is the CPI-U for the first month of the first full calendar quarter after a drug's first marketed date. (4) Notwithstanding paragraph (e)(3) of this section, for a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, the benchmark period CPI-U is the CPI-U for the first month of the first full calendar quarter after the Part B rebatable drug is assigned a billing and payment code other than a NOC code. (5) Notwithstanding paragraph (e)(4) of this section, for a Part B rebatable drug that is a selected drug (as defined in section 1192(c) of the Act) with respect to a price applicability period (as defined in section 1191(b)(2) of the Act), in the case such Part B rebatable drug is no longer considered to be a selected drug, the benchmark period CPI-U is the CPI-U for the July of the year preceding the last year during such price applicability period. (f) Identification of the rebate period CPI-U. (g) Determination of inflation-adjusted payment amount. [89 FR 98578, Dec. 9, 2024, as amended at 90 FR 20808, May 16, 2025; 90 FR 50021, Nov. 5, 2025] § 427.303 Determination of total number of billing units. (a) General. (b) Total billing units. (1) Billing units of drugs acquired through the 340B Program. (i) Separately payable units in all professional claim lines for dates of service during 2023 and 2024 that were billed with the “JG” or “TB” modifiers and separately payable billing units in claim lines for professional claims with dates of service during 2023 and 2024 from suppliers that are associated with covered entities listed by the Health Resources and Services Administration (HRSA) 340B Office of Pharmacy Affairs Information System (OPAIS) as participating in the 340B Program. CMS will use National Provider Identifiers (NPI) and/or Medicare Provider Numbers (MPN), or other fields in the OPAIS database (such as name and address) if NPI or MPN is not available, to identify these suppliers and the claims submitted with such identifiers; (ii) Separately payable billing units in claim lines for institutional claims that are billed with the “JG” or “TB” modifiers and units in institutional claims from covered entities that are critical access hospitals and Maryland waiver hospitals with dates of service from January 1, 2023 through December 31, 2023. CMS will use NPIs and MPNs, or other fields in the OPAIS database (such as name and address) if NPI or MPN are not available, to identify these suppliers and the claims submitted with such identifiers; (iii) Separately payable billing units in claim lines for institutional claims that are billed with the “JG” or “TB” modifiers for claims with dates of service from January 1, 2024 through December 31, 2024; and (iv) Separately payable billing units in claim lines billed with the “TB” modifier for claims with dates of service on or after January 1, 2025. (2) Billing units with a rebate under section 1927 of the Social Security Act. (i) CMS will not exclude billing units from claims when the Medicare beneficiary has Medicaid coverage that does not include cost-sharing assistance, including Specified Low-Income Medicare Beneficiaries (SLMB), Qualified Disabled and Working Individuals (QDWI), and Qualifying Individuals (QI) beneficiaries. (ii) [Reserved] (3) Billing units that are packaged into the payment amount for an item or service and are not separately payable. (4) Billing units when a drug is no longer a Part B rebatable drug. (i) Determine if such drug has become a multiple source drug by reviewing FDA's most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations” (commonly known as the Orange Book) for a drug that is that is rated as therapeutically equivalent to such drug; and, (ii) If a therapeutically equivalent drug is identified as set forth in paragraph (b)(4)(i) of this section, determine if the therapeutically equivalent drug was sold or marketed during the applicable calendar quarter; and (iii) Exclude billing units of such drug furnished on and after the first day of the calendar month in which the therapeutically equivalent drug was first sold or marketed during the applicable calendar quarter. (5) Billing units subject to discarded drug refunds. § 427.304 Adjustments for changes to billing and payment codes. (a) Changes in billing unit dose description. (b) Instances when a new billing and payment code is assigned. (c) Documentation. Subpart E—Reducing the Rebate Amount for Part B Rebatable Drugs in Shortage and When There Is a Severe Supply Chain Disruption § 427.400 Definitions. As used in this subpart, the following definitions apply: Currently in shortage Drug shortage shortage Natural disaster Other unique or unexpected event Plasma-derived product Severe supply chain disruption § 427.401 Reducing the rebate amount for Part B rebatable drugs currently in shortage. (a) General. (b) Calculation of the reduced rebate amount. Equation 1 to Paragraph (b)(1) Reduced Total Rebate Amount minus minus (2) For purposes of paragraph (b)(1) of this section, the applicable percent reduction is: (i) For a Part B rebatable drug that is a plasma-derived product: (A) 75 percent for the first 4 consecutive applicable calendar quarters such drug is currently in shortage. (B) 50 percent for the second 4 consecutive applicable calendar quarters such drug is currently in shortage. (C) 25 percent for each subsequent applicable calendar quarter such drug is currently in shortage. (ii) For a Part B rebatable drug that is not a plasma-derived product: (A) 25 percent for the first 4 consecutive applicable calendar quarters such drug is currently in shortage. (B) 10 percent for the second 4 consecutive applicable calendar quarters such drug is currently in shortage. (C) 2 percent for each subsequent applicable calendar quarter such drug is currently in shortage. (iii) Except as provided in paragraph (b)(iv) of this section, CMS will apply the greatest applicable percent reduction as set forth in paragraph (b)(2)(i)(A) or (b)(2)(ii)(A) of this section starting with the first applicable calendar quarter that a Part B drug or biological product is described as currently in shortage regardless of whether the drug or biological product meets the definition of a Part B rebatable drug or whether a rebate amount is owed for that calendar quarter, starting with the calendar quarter that begins January 1, 2023. (iv) If any applicable calendar quarter for which a rebate reduction determined under § 427.402 has been granted would be the first of the four consecutive applicable calendar quarters described in paragraph (b)(2)(i)(A) or (b)(2)(ii)(A) of this section and the Part B rebatable drug or biological product continues to be currently in shortage after the rebate reduction period described in § 427.402, CMS will treat the quarter following the final quarter in which the rebate reduction determined under § 427.402 applies as the first of the four consecutive applicable calendar quarters so described. (3) For purposes of paragraph (b)(1) of this section, the percentage of time the drug is currently in shortage during the applicable calendar quarter is equal to the number of days such drug is currently in shortage in an applicable calendar quarter, divided by the total number of days in the applicable calendar quarter. (c) Application of reduction. [89 FR 98578, Dec. 9, 2024, as amended at 90 FR 20808, May 16, 2025] § 427.402 Reducing the rebate amount for certain Part B rebatable drugs when there is a severe supply chain disruption. (a) General. (b) Calculation of the reduced rebate amount Initial reduction. (2) Extension of reduction. (3) Application of reduction. (4) Limitation on rebate reductions. (i) If a manufacturer believes there are multiple events causing severe supply chain disruptions during the same 4 applicable calendar quarters for the same Part B rebatable biosimilar biological product and submits multiple rebate reduction requests for the same product, CMS will grant no more than 1 rebate reduction determined under paragraph (b)(1) or (2) of this section for that product for those consecutive applicable calendar quarters. (ii) If CMS grants a rebate reduction request under this section, and the Part B rebatable biosimilar biological product subject to the reduction appears as currently in shortage during any of the 4 applicable calendar quarters as the ones for which the severe supply chain disruption reduction request was granted, CMS will reduce the rebate amount as determined under paragraph (b)(1) of this section and will not grant a reduction determined under § 427.401 during those applicable calendar quarters. (iii) If a Part B rebatable biosimilar biological product that is currently in shortage experiences a severe supply chain disruption, CMS will reduce the rebate amount as determined under paragraph (b)(1) of this section and will not grant a reduction determined under § 427.401 during those applicable calendar quarters. (c) Eligibility for a rebate reduction Eligible drug. (2) Timing. (3) Required elements of a rebate reduction request. (i) Evidence that the severe supply chain disruption directly affects the manufacturer itself, a supplier of an ingredient or packaging, a contract manufacturer, or a method of shipping or distribution that the manufacturer uses to make or distribute the Part B rebatable biosimilar biological product(s), such as a change in the production or distribution of the Part B rebatable biosimilar biological product(s) that is reasonably likely to lead to a significant reduction in the U.S. supply of product and significantly affects the manufacturer's ability to fill orders or meet expected demand for the Part B rebatable biosimilar biological product(s) for at least 90 days; (ii) Information about when the manufacturer expects supply of the Part B rebatable biosimilar biological product(s) to meet expected demand; (iii) Evidence that the natural disaster or other unique or unexpected event caused the severe supply chain disruption, including when the natural disaster or other unique or unexpected event occurred or began occurring, and the expected or actual duration of the severe supply chain disruption; and (iv) Evidence of the manufacturer's physical presence related to manufacturing the Part B rebatable biosimilar biological product(s) in a geographic area where a natural disaster or other unique or unexpected event occurred. If the manufacturer is not physically present in a geographic area where a natural disaster or other unique or unexpected event occurred, but believes there is a severe supply chain disruption caused by a natural disaster or other unique or unexpected event that affects the manufacturer's Part B rebatable biosimilar biological product(s), the information and supporting documentation may include evidence of the impact of the natural disaster or other unique or unexpected event on the supply chain of the Part B rebatable drug or biosimilar, on a supplier of an ingredient or packaging, or method of shipping or distribution that the manufacturer uses. (4) Evaluation criteria. (i) A severe supply chain disruption has occurred during the applicable calendar quarter; (ii) The severe supply chain disruption directly affects the manufacturer itself, a contract manufacturer, a supplier of an ingredient or packaging, or a method of shipping or distribution that the manufacturer uses in a significant capacity to make or distribute the Part B rebatable biosimilar biological product; and (iii) The severe supply chain disruption was caused by a natural disaster or other unique or unexpected event. (5) Rebate reduction extensions. (i) To receive consideration for a rebate reduction extension, a manufacturer must submit a request with updated or new information and supporting documentation on why the Part B rebatable biosimilar biological product continues to be affected by the severe supply chain disruption during the fifth through eighth applicable calendar quarters. (ii) A manufacturer must submit the rebate reduction extension request at least 60 calendar days before the start of the fifth applicable calendar quarter to receive consideration for a reduction in the rebate amount owed, if any, as determined under paragraph (b)(2) of this section. (6) Decision to grant or deny a request. (i) CMS will deny a rebate reduction request that does not meet the criteria set forth in paragraph (c)(4) of this section or that is incomplete or untimely based on the requirements set forth in this paragraph (c). (ii) CMS will deny a rebate reduction extension request that does not meet the criteria set forth in paragraph (c)(5) of this section, that is incomplete or untimely based on the requirements set forth in paragraph (c)(5), or if a reduction determined under paragraph (b)(1) of this section was not granted for such biosimilar biological product. (iii) CMS' decisions to deny a request are final and will not be subject to an appeals process. (7) Public disclosure of information. Subpart F—Reports of Rebate Amounts, Reconciliation, Suggestion of Error, and Payments § 427.500 Definitions. As used in this subpart, date of receipt § 427.501 Rebate Reports and reconciliation. (a) General. (b) Preliminary Rebate Report. (1) The Preliminary Rebate Report for each Part B rebatable drug will include the following information: (i) The NDC(s) and billing and payment codes identified for the Part B rebatable drug set forth in § 427.20. (ii) Total number of billing units as determined under § 427.303. (iii) Payment amount benchmark quarter and payment amount in the payment amount benchmark quarter as determined under § 427.302(c) and (d). (iv) Applicable calendar quarter specified amount as determined under § 427.302(b). (v) Applicable benchmark period and rebate period CPI-Us as set forth in § 427.302(e) and (f). (vi) Inflation-adjusted payment amount as determined under § 427.302(g). (vii) The amount, if any, by which the specified amount as determined under § 427.302(b) exceeds the inflation-adjusted payment amount as determined under § 427.302(g) for the Part B rebatable drug for the applicable calendar quarter as set forth in § 427.302. (viii) Any applied reductions as determined under §§ 427.401 and 427.402. (ix) Rebate amount due as determined under § 427.301(a). (2) [Reserved] (c) Rebate Report. (1) The Rebate Report will include the information specified in paragraph (b)(1) of this section, with the inclusion of any revisions to such information resulting from CMS' review of a Suggestion of Error as set forth in § 427.503, if applicable, and any CMS-determined recalculations from paragraph (d)(2) of this section. (2) The Rebate Report is the invoice of a manufacturer's rebate amount due as determined under § 427.301, if any, for a Part B rebatable drug for an applicable calendar quarter. (3) The manufacturer's rebate amount due is reported as a dollar amount rounded to the nearest cent. (d) Reconciliation of the rebate amount. (1) Regular reconciliation. (i) Preliminary reconciliation. (A) Updated total number of rebatable units, as determined under § 427.303. (B) Updated payment amount benchmark quarter and payment amount in the payment amount benchmark quarter, as determined under § 427.302(c) and (d) if any inputs are restated within the reconciliation run-out period. (C) Applicable calendar quarter specified amount as determined under § 427.302(b), if any inputs are restated within the reconciliation run-out period. (D) The excess amount by which the specified amount exceeds the inflation-adjusted payment amount as determined under § 427.302, if any inputs are restated within the reconciliation run-out period. (E) Reconciled total rebate amount as determined under § 427.301(a). (F) The difference between the total rebate amount due as specified on the Rebate Report set forth in paragraph (c) of this section and the reconciled rebate amount as set forth in this paragraph (d)(1)(i). (ii) Report with reconciled rebate amount. (2) CMS identification of error and manufacturer misreporting. (i) CMS identifies an agency error in the information specified in paragraphs (c) and (d)(1) of this section, including reporting system or coding errors, not later than 3 years from the date of receipt by a manufacturer of a reconciled rebate amount for the applicable calendar quarter; or (ii) CMS determines at any time that the information used by CMS to calculate the rebate amount was inaccurate due to manufacturer misreporting. (3) Impact of reconciliation on rebate amount. (i) A report with a reconciled rebate amount that is an increase to the rebate amount is the invoice for such additional amount due on the manufacturer's rebate amount as determined under § 427.301 for a Part B rebatable drug for an applicable calendar quarter. (ii) [Reserved] (4) Drugs included in a reconciliation. [89 FR 98578, Dec. 9, 2024, as amended at 90 FR 20808, May 16, 2025; 90 FR 50021, Nov. 5, 2025] § 427.502 Rebate Reports for applicable calendar quarters in calendar years 2023 and 2024. (a) Transition rule for reporting. (b) Rebate Report information for applicable calendar quarters in calendar years 2023 and 2024. (c) Rebate Report procedures for applicable calendar quarters in calendar years 2023 and 2024. (1) The 4 applicable calendar quarters in calendar year 2023 will be consolidated into a single report and manufacturers will receive a single Preliminary Rebate Report followed by a single Rebate Report. (i) Discarded drug units for which a refund is owed will be removed from the total number of billing units in the single Preliminary Rebate Report for the applicable calendar quarters in calendar year 2023. (ii) For this single Preliminary Rebate Report for the applicable calendar quarters in calendar year 2023, the Suggestion of Error period as set forth in § 427.503 will be 30 calendar days. (iii) No regular reconciliation of the rebate amount as set forth in § 427.501(d)(1) will be conducted for the rebate amount in the single Rebate Report for the applicable calendar quarters in calendar year 2023. (2) The four applicable calendar quarters in calendar year 2024 will be consolidated into a single report and manufacturers will receive a single Preliminary Rebate Report followed by a single Rebate Report. (i) For this single Preliminary Rebate Report for the applicable calendar quarters in calendar year 2024, the Suggestion of Error period as set forth in § 427.503 will be 30 calendar days. (ii) Within 9 months after issuance of the single Rebate Report, CMS will perform one regular reconciliation for the applicable calendar quarters in calendar year 2024 in order to include revisions to the information used, determined under § 427.501(b)(1), to calculate the rebate amount. Such reconciliation will be as determined under § 427.501(d) inclusive of a preliminary reconciliation and a report with the reconciled rebate amount. (iii) The Suggestion of Error period for the preliminary reconciliation for the applicable calendar quarters in calendar year 2024 will be 10 calendar days. [89 FR 98578, Dec. 9, 2024, as amended at 90 FR 50021, Nov. 5, 2025; 91 FR 12081, Mar. 12, 2026] § 427.503 Suggestion of Error. (a) General. (1) Section 1847A(i)(8) of the Act precludes administrative or judicial review on the determination of units as set forth in § 427.303, the determination of whether a drug is a Part B rebatable drug as set forth in § 427.101, and the calculation of the rebate amount as set forth in § 427.301, inclusive of any reconciled rebate amount. (2) [Reserved] (b) Process of submission. (c) Timing. (d) Notice. (2) CMS will notify the manufacturer whether CMS revised its calculation of the rebate amount based on the Suggestion of Error. § 427.504 Manufacturer access to Rebate Reports. (a) General. (1) Access the manufacturer's Rebate Report as set forth in §§ 427.501 and 427.502, including any report of reconciled rebate amount as set forth in §§ 427.501(d) and 427.502(c)(2)(ii); (2) Submit a Suggestion of Error as set forth in §§ 427.502(c)(1)(ii) and (c)(2)(i) and 427.503; and (3) Pay a rebate amount as set forth in § 427.505. (b) [Reserved] § 427.505 Deadline and process for payment of rebate amount. (a) Rebate amounts owed by a manufacturer. (1) A Rebate Report as set forth in § 427.501(c) or § 427.502(c)(1) or (2); or (2) A report of a reconciled rebate amount as set forth in § 427.501(d) or § 427.502(c)(2)(ii). (b) Failure to pay a rebate amount. (c) Refund to the manufacturer. Subpart G—Enforcement of Manufacturer Payment of Rebate Amounts § 427.600 Civil money penalty notice and appeals procedures. (a) General. (b) Determination of the civil money penalty amount. (1) The civil money penalty is in addition to the rebate amount due. (2) If a reconciled rebate amount as determined in § 427.501(d) or § 427.502(c)(2)(ii) results in an increase to the rebate amount due, a separate civil money penalty may be imposed for the failure by a manufacturer to provide an inflation rebate for the applicable quarter for the increase to the rebate amount due. (c) Notice of imposition of civil money penalties. (1) A description of the basis for the determination. (2) The basis for the penalty. (3) The amount of the penalty. (4) The date the penalty is due. (5) The manufacturer's right to a hearing as set forth in paragraph (e)(3) of this section. (6) Information about where to file the request for a hearing. (d) Collection. (2) In the event a manufacturer requests a hearing, pursuant to 42 CFR part 423, subpart T, the manufacturer must pay the amount in full within 60 calendar days after the date of a final decision by the Departmental Appeal Board, to uphold, in whole or in part, the civil money penalty. (3) If the 60th calendar day described in paragraphs (d)(1) and (2) of this section is a weekend or a Federal holiday, then the timeframe is extended until the end of the next business day. (e) Appeal procedures for civil money penalties. (1) Manufacturers may appeal the following determinations: (i) A CMS determination that the rebate amount was not paid by the applicable payment deadline as set forth in § 427.505. (ii) The calculation of the amount of the civil money penalty. (2) If CMS decides to impose a civil money penalty, CMS will provide the manufacturer with notice pursuant to the process set forth in paragraph (c) of this section. (3) A manufacturer has a right to a hearing following a decision by CMS to impose a civil money penalty following the administrative appeal process and procedures established in 42 CFR part 423, subpart T. (f) Other applicable provisions. (g) Bankruptcy.