C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER C—MEDICAL ASSISTANCE PROGRAMS › PART 447—PAYMENTS FOR SERVICES › Subpart I—Payment for Drugs

42 C.F.R. § 447.512

Drugs: Aggregate upper limits of payment

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(a) Multiple source drugs. Except for brand name drugs that are certified in accordance with paragraph (c) of this section, the agency payment for multiple source drugs must not exceed, in the aggregate, the amount that would result from the application of the specific limits established in accordance with § 447.514. If a specific limit has not been established under § 447.514, then the rule for “other drugs” set forth in paragraph (b) of this section applies.

(b) Other drugs. The agency payments for brand name drugs certified in accordance with paragraph (c) of this section and drugs other than multiple source drugs for which a specific limit has been established under § 447.514 must not exceed, in the aggregate, payment levels that the agency has determined by applying the lower of the following:

(1) AAC plus a professional dispensing fee established by the agency; or

(2) Providers' usual and customary charges to the general public.

(c) Certification of brand name drugs. (1) The upper limit for payment for multiple source drugs for which a specific limit has been established under § 447.514 does not apply if a physician certifies in his or her own handwriting (or by an electronic alternative means approved by the Secretary) that a specific brand is medically necessary for a particular beneficiary.

(2) The agency must decide what certification form and procedure are used.

(3) A check off box on a form is not acceptable but a notation like “brand necessary” is allowable.

(4) The agency may allow providers to keep the certification forms if the forms will be available for inspection by the agency or HHS.

Notes of Decisions
Cited in 22 cases (12 in the last 5 years), 2009–2025 · leading case: ASTRAZENECA LP v. State
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ASTRAZENECA LP v. State (2009) ala · cites it 8× “See 42 C.F.R. § 447.512 (formerly 42 C.F.R. § 447.”
Michael Yarberry v. Supervalu Incorporated (2021) ca7 · cites it 4× “” 1 42 C.F.R. § 447.512 (b). Because both Medicare and 1 While the state plans for the four states implicated in this appeal contain definitions of U&C price that have slight variances from the No.”
United States ex rel. Schutte v. Supervalu Inc. (2023) scotus “See 42 CFR § 447.512 (b)(2) (2021). Those regu- lations 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.”
Thomas Proctor v. Safeway, Inc. (2022) ca7 · cites it 4× “” 42 C.F.R. § 447.512 (b). The regulation does not define “to the general public.”
United States Ex Rel. Garbe v. Kmart Corp. (2016) ca7 “1999) (interpreting 42 C.F.R. § 447.512 (b), then numbered 42 C.”
Iowa Department of Human Services v. Centers for Medicare & Medicaid Services (2009) ca8 · cites it 4× “See 42 C.F.R. § 447.512 . The first FUL applies to “multiple source drugs” 1 that CMS has specifically listed, and it is based on the price of the least costly therapeutic equivalent drug.”
Sandoz, Inc. v. State (2012) ala · cites it 3× “1 State’s brief, at 5 (citing 42 C.F.R. § 447.512 (2010) (formerly 42 C.”
U.S. ex rel. Azam Rahimi v. Rite Aid Corp. (2021) ca6 “See 42 C.F.R. § 447.512 (b)(2). In general terms, this means that pharmacies cannot charge the government more than the “cash price” offered to the public to fill such prescriptions.”
State v. Abbott Laboratories (2012) wis “42 C.F.R. § 447.512 (b). The regulations define EAC as the "best estimate of the price generally and currently paid by providers for a drug.”
Mississippi Medicaid Pharmaceutical Average Wholesale Price Litigation v. State (2015) miss “42 C.F.R. § 447.512 (b). 1 Federal Regulations defined EAC as Medicaid’s “best estimate of the price generally and currently paid by providers for a drug marketed or sold by a particular manufacturer or labeler in the package size of drugs most frequently purchased by providers.”
United States ex rel. Schutte v. Supervalu Inc. (2023) scotus “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.”
United States v. SuperValu, Inc. (2016) ilcd “” 42 C.F.R. § 447.512 (b). The State Medicaid usual and customary regulations are based on this requirement and all State plans must periodically determine that they “are in accordance with § 447.”
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