Two Drug-Related Provisions Enacted in Infrastructure Law

While most of the Congressional focus on drug pricing has centered on the reconciliation bill currently being hammered out in the House and Senate, the Infrastructure Investment and Jobs Act (the “Act”), which was signed by President Biden yesterday, contains two provisions relating to drug payment and discounting.  First, section 90006 imposes a moratorium on HHS’s implementation of an HHS OIG final rule, published on November 30, 2020, which amends the Federal health care program antikickback statute safe harbors as they apply to drug rebates paid to Medicare Part D plans and Medicaid Managed Care plans (or their PBMs).  As we’ve previously reported, the effect of the safe harbor amendments would be to protect such rebates only if they were passed through by the plan sponsor or PBM to the dispensing pharmacy, which would be a major change from the typical practice today.  The effective date of the amendments had already been delayed until January 1, 2023 pursuant to court orders in a lawsuit brought by the PBM industry association.  The Act now extends that delay until January 1, 2026.

In addition, section 90004 of the Act requires manufactures of drugs sold in single-dose containers to pay refunds to Medicare for discarded Part B drugs.  Medicare Part B reimburses providers for quantities of drugs packaged in single-use containers that are left over after administration and discarded.  Congressional proponents of this provision argued that manufacturers have been deliberately overfilling single-use drug containers to permit their customers to obtain greater reimbursement, and have profited from the resulting increase in utilization of the drug.  The new refund requirement applies to drugs that are (1) separately paid under Medicare Part B; (2) single source drugs (i.e., having no A-rated therapeutic equivalents) or biologics (including biosimilars); and (3) sold in single-dose containers or packages.  Manufacturers covered by this provision will have to pay refunds for discarded amounts beginning 18 months after the drug is first covered under Part B, but no earlier than January 1, 2023.  CMS will send the manufacturer a quarterly report showing the number of units (if any) that were discarded during the quarter, based on claims using the JW modifier, which CMS has established to identify discarded units.  The CMS report will also show the total amount due for the quarter, which will be the number of discarded units multiplied by 90% of the allowed charge per unit.  That percentage may be reduced by regulation for drugs with “unique circumstances” (an undefined term).  Excluded from the refund requirement are drugs that are not separately payable, radiopharmaceuticals, imaging agents, and drugs that require filtration prior to administration where drug is discarded after the filtration process.