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Federal Register / Vol. 86, No. 221 / Friday, November 19, 2021 / Rules and Regulations
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issues should be directed to the Office of the Inspector General OIG.
Comment: A couple of commenters reiterated their comments provided on the Establishing Minimum Standards in Medicaid State Drug Utilization Review DUR and Supporting ValueBased Purchasing VBP for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability TPL Requirements proposed rule that appeared in the June 19, 2020
Federal Register 85 FR 37256, including comments regarding the drug utilization review requirements.
Response: The DUR requirements set forth in the December 31, 2020 final rule were not a subject of this proposed rule and were not impacted by the proposed delay.
After consideration of the comments received regarding the proposed delay to amendatory instruction 10.a. of the December 31, 2020 final rule, we are finalizing the proposed July 1, 2022
effective date.
B. Delay of Inclusion Date of U.S.
Territories in Amended Regulatory Definitions of States and United States 447.502
The following is a summary of the comments received and our responses on the proposed delay of the inclusion date for the U.S. territories in the definition of States and United States at 447.502 to April 1, 2024, or, alternatively, a date that is earlier than April 1, 2024, but not before January 1, 2023 based on public comments received.
Comment: Several commenters supported the proposed delay of the April 1, 2022 inclusion date to April 1, 2024, or, alternatively, to a date earlier than April 1, 2024, but not before January 1, 2023 based on public comments. These commenters supported the proposed delay because of the territories current need to focus on the PHE relating to COVID19 and the time needed to prepare for the technology infrastructure changes necessary to support participation in the MDRP. The commenters also noted concern that manufacturers may increase their drug prices in the territories as a result of their participation in the MDRP. One commenter specifically noted concern as to whether the territories would be capable of participating in the MDRP
prior to April 1, 2024.
Another commenter supported the proposed delay, given the various programs and processes that a state has to put in place to effectively and efficiently participate in the MDRP, such as establishing a drug
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manufacturer rebate billing mechanism, a state drug utilization reporting mechanism, a process to assure that all drugs of a manufacturer that sign a rebate agreement with the Secretary of HHS are covered, a dispute resolution process, and a Drug Utilization Review DUR program.
Another commenter supported a proposed delay of the April 1, 2022
inclusion date and suggested October 1, 2023 as an alternative inclusion date.
The commenter stated that an October 1, 2023 inclusion date would provide an additional eighteen months beyond April 1, 2022 before the territories are included in the amended regulatory definitions of States and United States, and believed that an October 1, 2023 inclusion date is justified because some interested territories have requested more time to prepare for MDRP participation and suggested potential policy changes to address increases in drug prices. In addition, the commenter indicated that the territories and manufacturers will need this additional time because their resources continue to be diverted to the COVID
19 pandemic response.
Another commenter found it difficult to envision territories having the infrastructure or funding in place to fully transition to the MDRP given the PHE. The commenter also noted that even if a territory was prepared to make this transition, the providers, including hospitals and others across the healthcare marketplace that prescribe and provide prescription drugs, would need to update their systems, resulting in significant confusion and patient access barriers. The commenter believed further guidance is necessary to prepare the territories for this transition, as well as the providers of care within those programs. The commenter restated these reasons for prior delays in implementing this requirement as rationale for reversing the 2016 COD
final rule including territories in the definition of States and United States.
Other commenters indicated that they did not support the proposed delay because one territory in particular, Puerto Rico, has made significant efforts to prepare for participation in the program. The commenter indicated that the proposed delay would be financially harmful to that territory because it has already written a request for proposal RFP to procure a vendor to manage participation in the MDRP, which has an expected launch date of July 1, 2022, and a delay would result in the need for multiple modifications to the territorys RFP. The commenter also noted that the territory has undertaken a significant
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amount of budgeting and financial forecasting as part of their efforts, which indicated that there would be a financial loss as a result of unrealized federal rebates for both brand and generic drugs if there is a delay beyond the territorys FY 2023, which runs from July 2022
through June 2023.
Response: In proposing this delay, and in finalizing a new inclusion date of January 1, 2023, we considered all public comments received, the needs of all the stakeholders, including territories and manufacturers, while considering the impact that the delay could have on access to necessary and affordable medications for the citizens of the territories, both those that would and would not participate in MDRP.
To balance the willingness of territories that want to participate, while accommodating the time to prepare waivers for those that do not, we have determined that the January 1, 2023
date, which falls within the scope of the alternative proposal, is appropriate.
Based on the information available to us at this time, we believe that of the five territories, only two will make efforts to participate in MDRP, regardless of the ultimate inclusion date, and the others will require additional time to request the applicable waivers. Of the two territories that we anticipate will make efforts to participate in MDRP, only one Puerto Rico has definitively indicated that they are ready and will be able to participate in MDRP as early as July 1, 2022, while the other U.S. Virgin Islands has previously expressed interest, but may or may not have decided whether to participate by January 1, 2023.
Those territories that do not participate will need time to prepare to waive out of the program through the appropriate Medicaid waiver mechanism.
To accommodate the resource needs of the territories during the PHE, we believe a January 1, 2023 inclusion date gives Puerto Rico the ability to participate sooner than the April 1, 2024
inclusion date, while giving the other territories a firm deadline to make a final decision to participate or waive out of the program. The timeline also recognizes the work done to date by Puerto Rico to prepare to participate in the program. Therefore, the new inclusion date for U.S. Territories in the amended regulatory definitions of States and United States for purpose of the Medicaid Drug Rebate Program will be January 1, 2023, which is the earliest new inclusion date that we could have finalized given our proposals in the proposed regulation.

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