C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER B—MEDICARE PROGRAM › PART 405—FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED › Subpart E—Criteria for Determining Reasonable Charges

42 C.F.R. § 405.517

Payment for drugs and biologicals that are not paid on a cost or prospective payment basis

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(a) Applicability—(1) Payment for drugs and biologicals before January 1, 2004. Payment for a drug or biological that is not paid on a cost or prospective payment basis is determined by the standard methodology described in paragraph (b) of this section. Examples of when this procedure applies include a drug or biological furnished incident to a physician's service, a drug or biological furnished by an independent dialysis facility that is not included in the ESRD composite rate set forth in § 413.170(c) of this chapter, and a drug or biological furnished as part of the durable medical equipment benefit.

(2) Payment for drugs and biologicals on or after January 1, 2004. Effective January 1, 2004, payment for drugs and biologicals that are not paid on a cost or prospective payment basis are paid in accordance with part 414, subpart I of this chapter.

(3) Payment for drugs and biologicals on or after January 1, 2005. Effective January 1, 2005, payment for drugs and biologicals that are not paid on a cost or prospective payment basis are paid in accordance with part 414, subpart K of this chapter.

(b) Methodology. Payment for a drug or biological described in paragraph (a) of this section is based on the lower of the actual charge on the Medicare claim for benefits or 95 percent of the national average wholesale price of the drug or biological.

(c) Multiple-source drugs. For multiple-source drugs and biologicals, for purposes of this regulation, the average wholesale price is defined as the lesser of the median average wholesale price for all sources of the generic forms of the drug or biological or the lowest average wholesale price of the brand name forms of the drug or biological.

[63 FR 58905, Nov. 2, 1998, as amended at 69 FR 1116, Jan. 7, 2004; 69 FR 66420, Nov. 15, 2004]
Notes of Decisions
Cited in 20 cases, 1998–2015 · leading case: In re Pharm. Indus. Average Wholesale Price Litig., 230 F.R.D. 61 (D. Mass. 2005).
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In re Pharm. Indus. Average Wholesale Price Litig., 230 F.R.D. 61 (D. Mass. 2005). · cites it 5× “§§ 1395u(o), 13951(s); 42 C.F.R. § 405.517 . From 1992 to 1997, reimbursement for single-source brand-name drugs was set at the lesser of the estimated acquisition cost (“EAC”) or AWP.”
In Re Pharm. Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 20 (D. Mass. 2007). · cites it 3× “See 42 C.F.R. § 405.517 (1999) (Department of Health and Human Services (“DHHS”) Regulations); see also 42 U.”
In Re Pharm. Indus. Average Wholesale Price Lit., 582 F.3d 156 (1st Cir. 2009). · cites it 2× “at 59,621 (promulgating 42 C.F.R. § 405.517 (1992)) (emphasis added).”
In Re Lupron® Mktg. & Sales Practices Litig., 295 F. Supp. 2d 148 (D. Mass. 2003). · cites it 2× “42 C.F.R. § 405.517 . 7 Medicare administrators historically relied on the AWP in setting the reimbursement rate for Lupron®.”
In re Lupron Mktg. & Sales Practices Litig., 228 F.R.D. 75 (D. Mass. 2005). · cites it 2× “42 C.F.R. § 405.517 (amended Nov. 2, 1998; Jan.”
United States ex rel. Ven-A-Care of the Florida Keys, Inc. v. Abbott Labs., Inc., 254 F.R.D. 35 (D. Mass. 2008). · cites it 6× “§ 1395u(o); 42 C.F.R. § 405.517 (1998) (amended 1998, 2004); 42 C.”
In Re Lupron Mktg. & Sales Practices Litig., 245 F. Supp. 2d 280 (D. Mass. 2003). · cites it 2× “6 42 C.F.R. § 405.517 . Medicare administrators historically relied on the AWP provided by TAP to the Red Book, an industry compilation of wholesale drug prices, in setting the reimbursement rate for Lupron®.”
In Re Pharm. Indus. Average Wholesale Price Litig., 460 F. Supp. 2d 277 (D. Mass. 2006). · cites it 2× “at 59,621 (promulgating 42 C.F.R. § 405.517 (1992)) (emphasis added).”
Tap Pharm. v. U.S. Dep't of Health & Human Servs. Health Care Fin. Admin. Palmetto Gov't Benefits Administrators, 163 F.3d 199 (4th Cir. 1998). · cites it 3× “§§ 1395k, 1395Z, 1395u(o)(l); 42 C.F.R. § 405.517 (b) (1998). In October 1996, Palmetto Government Benefits Administrators (Palmetto), which administers Medicare Part B benefits in South Carolina under the authority of the Health Care Financing Administration and the United…”
In Re Pharm. Indus. Average Wholesale Price Litig., 263 F. Supp. 2d 172 (D. Mass. 2003). “” 42 C.F.R. § 405.517 ; see also 42 U.S.C. § 1395u(o) (“.”
Commonwealth Ex Rel. Pappert v. TAP Pharm. Prods., Inc., 885 A.2d 1127 (Pa. Commw. Ct. 2005). “42 C.F.R. § 405.517 . Medicare pays 80% of the allowable amount, i.”
In re Pharm. Indus. Average Wholesale Price Litig., 252 F.R.D. 83 (D. Mass. 2008). “Effective January 1, 1998, pursuant to a statutory change, the Medicare regulations were amended to provide reimbursement for the lower of the billed charge or 95 percent of AWP.”
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— 42 C.F.R. § 405.517(b) — 1 case
Tap Pharm. v. U.S. Dep't of Health & Human Servs. Health Care Fin. Admin. Palmetto Gov't Benefits Administrators, 163 F.3d 199 (4th Cir. 1998). “§§ 1395k, 1395Z, 1395u(o)(l); 42 C.F.R. § 405.517 (b) (1998). In October 1996, Palmetto Government Benefits Administrators (Palmetto), which administers Medicare Part B benefits in South Carolina under the authority of the Health Care Financing Administration and the United…”
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