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Federal Register / Vol. 86, No. 102 / Friday, May 28, 2021 / Proposed Rules I. Background A. Proposed Delays in Effective and Inclusion Dates of Certain Regulation Provisions CMS is proposing to delay the January 1, 2022 effective date for amendatory instruction 10.a. of the final rule entitled, Medicaid Program;
Establishing Minimum Standards in Medicaid State Drug Utilization Review DUR and Supporting Value-Based Purchasing VBP for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability TPL
Requirements 85 FR 87000, for 6
months to July 1, 2022, and to delay the April 1, 2022, inclusion date in the amended regulatory definitions of States and United States, adopted in the interim final rule with comment period entitled Medicaid Program;
Covered Outpatient Drugs; Further Delay of Inclusion of Territories in Definitions of States and United States 84 FR 64783, for 2 years until April 1, 2024, or in the alternative, to a date earlier than April 1, 2024, but not before January 1, 2023.
B. Proposed Delay of Effective Date of Amendatory Instruction 10.a.
On December 31, 2020, we published a final rule in the Federal Register entitled Medicaid Program;
Establishing Minimum Standards in Medicaid State Drug Utilization Review DUR and Supporting Value-Based Purchasing VBP for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability TPL
Requirements 1 85 FR 87000
hereinafter referred to as the December 31, 2020 final rule. The December 31, 2020 final rule advanced CMS efforts to support state flexibility to enter into innovative value-based purchasing VBP arrangements with drug manufacturers for new and innovative, and often costly therapies, such as gene therapies, and codified new approaches required by section 1004 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment SUPPORT for Patients and Communities Act SUPPORT Act Pub.
L. 115271, enacted October 24, 2018
and the existing Medicaid DUR program to improve the clinical use of opioids and reduce the potential for abuse in Medicaid patients. In addition, it codified in regulation several changes made in recent legislation and clarified other provisions of regulations relating 1 https www.federalregister.gov/documents/
2020/12/31/2020-28567/medicaid-programestablishing-minimum-standards-in-medicaid-statedrug-utilization-review-dur-and.

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to the Medicaid Drug Rebate Program MDRP.
The regulations included in the December 31, 2020 final rule went into effect on March 1, 2021, except for certain amendatory instructions, including instruction 10.a., which is effective on January 1, 2022. We are proposing to delay the January 1, 2022
effective date for amendatory instruction 10.a. of the December 31, 2020 final rule on manufacturer reporting of multiple best prices connected to a VBP arrangement, to July 1, 2022, and are seeking public comment on the proposed delay as outlined in section I.A. of this proposed rule. As discussed in greater detail in section II. of this proposed rule, we believe a delay of 6 months is warranted to assure that stakeholders have the ability to implement the new VBP
policy in a manner that assures that patient access and quality of care is protected. We seek public comments on this proposed delay in the effective date, including the impact of this delay on affected beneficiaries. The primary reason for the original delay, and the new proposed delay, is to provide more time for CMS, states, and manufacturers to make the complex system changes necessary to implement the new best price and VBP program, and assure patient access and quality of care, given the current need to devote resources to the public health emergency PHE
relating to COVID19 that has been in effect, and will likely remain in effect through 2021.
C. Proposed Delay of Inclusion Date in Amended Regulatory Definitions of States and United States The Covered Outpatient Drug COD
final rule, published in the February 1, 2016 Federal Register 81 FR 5170, amended the regulatory definitions of States and United States to include the U.S. territories American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands for the purposes of the MDRP with a delayed inclusion date of April 1, 2017. We stated in the preamble to the final rule that U.S. territories may use existing waiver authority to elect not to participate in the MDRP consistent with the statutory waiver standards.
Specifically, the Northern Mariana Islands and American Samoa may seek to opt out of participation under the broad waiver that has been granted to them in accordance with section 1902j of the Act. The territories of Puerto Rico, the Virgin Islands, and Guam may use waiver authority under section 1115 of the Act to waive section 1902a54 of the Act, which requires state
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compliance with the applicable requirements of section 1927 of the Act 81 FR 5203 through 5204.
The change to the definition of States and United States under the COD final rule to include the territories would also impact the quarterly calculation of average manufacturer price AMP and best price by manufacturers. That is, the change requires manufacturers to include prices paid by entities in the U.S. territories in the same manner in which they include prices paid by entities located in one of the 50 states and District of Columbia 81 FR 5224 in AMP and best price. It requires manufacturers to include eligible sales and associated discounts, rebates, and other financial transactions that take place in the U.S. territories in their calculations of AMP and best price once the revised definitions of States and United States take effect, regardless of whether the U.S. territories seek to waive participation in the MDRP.
Once the COD final rule became effective, CMS began discussions with the territories regarding their participation in the MDRP. Based on those discussions, it became evident that interested territories would not be ready to participate in the MDRP by April 1, 2017. Stakeholders also reiterated the concerns in the comments to the COD final rule 81 FR 5224 that drug manufacturers will likely need to increase drug prices paid by U.S.
territory Medicaid programs once the territories are included in the definitions of States and United States in order to avoid setting a new, lower best price. That is because if prices for drugs in the territories are lower than those in the states, then those prices could become the Medicaid best price for that drug in the entire Medicaid program. The manufacturers may then increase their drug prices in the territories to avoid this outcome, and an increase in drug prices in the territories could result in an increase in territory Medicaid drug spending without the offsetting benefit of receiving Medicaid rebates.
Furthermore, the increase in Medicaid drug spending could adversely impact the availability of drugs to patients in the territories because of their Medicaid funding cap.
As a result of these initial and subsequent discussions on preparedness, the potential for increased Medicaid drug prices in certain territories, and later, due to additional impacts of natural disasters in several of the territories, CMS issued two interim final rules with comment period IFC to further delay the
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