Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program

1. Background a. Overview of the Medicare Prescription Drug Inflation Rebate Program

Sections 11101 and 11102 of the Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169, enacted August 16, 2022) established requirements under which drug manufacturers must pay inflation rebates if they raise their prices for certain drugs payable under Part B and/ or covered under Part D faster than the rate of inflation. Specifically, section 11101 of the IRA amended section 1847A the Act by adding new subsection (i) which establishes a requirement for drug manufacturers to pay rebates into the Federal Supplementary Medical Insurance Trust Fund for Part B rebatable drugs for each calendar quarter beginning on or after January 1, 2023, if the specified amount, as determined under section 1847A(i)(3)(A)(ii) of the Act, exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. The IRA also provides for an adjustment to the beneficiary coinsurance amount in cases where the price of a Part B rebatable drug increases faster than the rate of inflation such that the beneficiary coinsurance is calculated based on the lower inflation-adjusted payment amount instead of the applicable payment amount. Section 1847A(i)(2) of the Act defines a “Part B rebatable drug,” in part, as a single source drug or biological product (as defined in section 1847A(c)(6)(D) of the Act), including a biosimilar biological product (as defined in section 1847A(c)(6)(H) of the Act), but excluding a qualifying biosimilar biological product (as defined in section 1847A(b)(8)(B)(iii) of the Act) for which payment is made under Part B.

Section 11102 of the IRA added section 1860D-14B of the Act, which requires drug manufacturers to pay rebates into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund for each 12-month applicable period, starting with the applicable period that began on October 1, 2022, for Part D rebatable drugs if the annual manufacturer price (AnMP) of such drug, which is calculated as set forth in section 1860D-14B(b)(2) of the Act, exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1860D-14B(b)(3) of the Act. Section 1860D- 14B(g)(1)(A) of the Act defines a “Part D rebatable drug,” in part, as a drug or biological described at section 1860D-14B(g)(1)(C) of the Act that is a “covered Part D drug” as that term is defined in section 1860D-2(e) of the Act. The definition of a Part D rebatable drug includes drugs approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic (FD&C) Act, drugs approved under an abbreviated new drug application under section 505(j) of the FD&C Act that meet certain sole source criteria described at sections 1860D-14B(g)(1)(C)(ii)(I) through (IV) of the Act, and biologicals licensed under section 351 of the Public Health Service Act, including biosimilars.

The IRA sets forth different parameters for determining rebates under the Medicare Part B Drug Inflation Rebate Program and the Medicare Part D Drug Inflation Rebate Program. For the rebates owed, for each calendar quarter beginning on or after January 1, 2023, the manufacturer of a Part B rebatable drug is required, for such drug, not later than 30 days after

the date of receipt of the Rebate Report from CMS, to pay a rebate into the Federal Supplementary Medical Insurance Trust Fund if the amount specified in section 1847A(i)(3)(A)(ii)(I) of the Act exceeds the inflation-adjusted payment amount (calculated as set forth in section 1847A(i)(3)(C) of the Act) for an applicable calendar quarter. In contrast, for each 12-month applicable period beginning on or after October 1, 2022, the manufacturer of a Part D rebatable drug is required, for such drug, not later than 30 days after the date of receipt of the Rebate Report from CMS, to pay a rebate into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund if the amount of the AnMP (calculated as set forth in section 1860D-14B(b)(2) of the Act) exceeds the inflation-adjusted payment amount (calculated as set forth in section 1860D-14B(b)(3) of the Act). For invoicing manufacturers for the rebate amount owed, under section 1847A(i)(1) of the Act, CMS must report rebate amounts to each manufacturer of a Part B rebatable drug no later than 6 months after the end of each calendar quarter, except that for calendar quarters beginning in 2023 and 2024, CMS had until September 30, 2025, to invoice manufacturers for rebates. In contrast, under section 1860D- 14B(a) of the Act, CMS must report rebate amounts to each manufacturer of a Part D rebatable drug no later than 9 months after the end of each applicable period, except that for the first two applicable periods (that is, October 1, 2022, to September 30, 2023, and October 1, 2023, to September 30, 2024), CMS has until December 31, 2025, to invoice manufacturers for Part D inflation rebates. Additionally, there are statutory differences in the inputs (that is, data sources) used to calculate the rebate amounts for Part B and Part D.

In the CY 2025 PFS final rule (89 FR 98228 through 98313), to implement sections 11101 and 11102 of the IRA, we codified these requirements and established other policies for the Medicare Part B Drug Inflation Rebate Program and the Medicare Part D Drug Inflation Rebate Program (collectively referred to as the “Medicare Prescription Drug Inflation Rebate Program”) in regulatory text at parts 427 and 428 under title 42, chapter IV of the Code of Federal Regulations for Part B and Part D, respectively. b. Summary of Proposed Policies for the Medicare Prescription Drug Inflation Rebate Program

In the CY 2026 Physician Fee Schedule (PFS) proposed rule (90 FR 32633 through 32645), we proposed certain limited modifications to the policies for the Medicare Prescription Drug Inflation Rebate Program set forth in new parts 427 and 428 under title 42, chapter IV of the Code of Federal Regulations for Part B and Part D. Specifically, we proposed new policies for the Medicare Part B Drug Inflation Rebate Program as follows:

Proposed Sec. 427.302(c)(5) described how CMS will identify the payment amount benchmark quarter if data needed to calculate the payment amount in the payment amount benchmark quarter are not available.

Proposed Sec. 427.302(d)(1)(i) described CMS' method for calculating the payment amount in the payment amount benchmark quarter if a published payment limit is not available.

Proposed Sec. 427.302(d)(1)(ii) described CMS' method for calculating the payment amount in the payment amount benchmark quarter if there is no published payment limit and neither positive Average Sale Price (ASP) nor positive Wholesale Acquisition Cost (WAC) data are available in the ASP Data Collection System.

We also proposed new policies for the Medicare Part D Drug Inflation Rebate Program as follows:

Proposed to use a claims-based methodology to implement Sec. 428.203(b)(2), which provides that, for claims with dates of service on or after January 1, 2026, and for an applicable period, CMS will exclude from the total number of units used to calculate the total rebate amount for a Part D rebatable drug those units of the Part D rebatable drug for which a manufacturer provided a discount under the 340B Program.

Proposed to establish a 340B repository to receive voluntary submissions from 340B covered entities of certain data elements from Part D claims for Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program.

We received public comments on the proposed provisions, comments on the Medicare Prescription Drug Inflation Rebate Program, and comments related to policies for which we did not make proposals. The following is a summary of these comments received and our responses on specific provisions.

Comment: A few commenters wrote in support of the Medicare Prescription Drug Inflation Rebate Program and a commenter wrote that any savings realized through the Medicare Prescription Drug Inflation Rebate Program should be reinvested into care delivery.

Response: We appreciate the commenters' feedback. We note that Part B and Part D inflation rebates paid by drug manufacturers are deposited into the Federal Supplementary Medical Insurance Trust fund in accordance with sections 11101(a) and 11102(a) of the IRA.

Comment: A commenter recommended that CMS establish that skin substitutes do not meet the statutory definition of a Part B rebatable drug that may be subject to inflation rebates under section 1847A(i) of the Act because they are not single source drugs or biological products. The commenter further noted that, thus far, CMS has excluded skin substitutes from the Medicare Part B Inflation Rebate Program as a matter of discretion.

Response: We appreciate the commenter's feedback regarding treatment of skin substitutes under the Medicare Part B Drug Inflation Rebate Program. We did not make any proposals associated with the treatment of skin substitutes for Part B inflation rebate calculations; therefore, this comment is considered to be out of scope of the proposed rule. At this time, skin substitutes are excluded from Part B inflation rebates as described at Sec. 427.101(b)(5) and as finalized in the CY 2025 PFS final rule (89 FR 98235).

Comment: A commenter interpreted section 1847A(i)(2)(A) of the Act to expressly define a Part B rebatable drug as a drug for which payment is made under Medicare Part B and, therefore, in the view of the commenter, to exclude units of drugs furnished under Medicare Advantage (MA), also called Part C. Additionally, the commenter stated that units of rebatable drugs furnished under MA should be excluded from Part B rebatable drugs because they are not separately payable. The commenter suggested CMS continue to exclude MA units from the calculation of Part B rebates.

Response: We appreciate the commenter's suggestion regarding the treatment of MA units in the calculation of Part B rebates. We did not make any proposals associated with the treatment of MA units in the calculation of Part B rebates; therefore, this comment is considered to be out of scope of the proposed rule. At this time and as stated in the CY 2025 PFS final rule (89 FR 98252), we will not include MA units in the calculation of Part B rebates due to operational considerations.

Comment: A commenter recommended CMS require the use of a non-340B claims modifier in addition to a 340B claims modifier, as applicable, for each unit billed under Part B and specify that accurate use of such a

modifier is necessary for a claim to be considered complete and eligible for payment. The commenter also recommended CMS establish a clearinghouse to validate 340B units.

Response: We appreciate the commenter's suggestion regarding 340B claims modifiers in Part B. We did not make any proposals associated with 340B claims modifiers or a clearinghouse to validate 340B units in Part B; therefore, this comment is considered to be out of scope of the proposed rule. We refer the commenter to our responses to similar suggestions in the CY 2025 PFS final rule (89 FR 98249).

Comment: A commenter recommended CMS waive the inflation rebate for a subset of drugs in a currently in shortage status, such as out-of- stock drugs entirely unavailable to the market for at least one year and provided several suggestions for implementing a waiver process. The commenter stated that implementing a waiver process for such drugs would incentivize manufacturers to improve supply and resolve the shortage more quickly compared to current policy described in subpart E of part 427.

Response: We appreciate this commenter for their recommendations. We did not make any proposals associated with the rebate reductions for Part B rebatable drugs; therefore, this comment is considered to be out of scope of the proposed rule. However, we note that as stated in the CY 2025 PFS final rule (89 FR 98255), we will provide a variable reduction in the rebate amount based on the length of time a Part B rebatable drug is in the status of “currently in shortage” on an FDA shortage list during a calendar quarter, with the reduction decreasing over time. At this time, we will not provide a full waiver of the rebate amount for drugs currently in shortage on an FDA shortage list, as providing a full waiver of the rebate amount could further incentivize manufacturers to delay taking appropriate steps to resolve a shortage to avoid an obligation to pay rebates for an extended period.

After consideration of the public comments received, we are finalizing, with modifications, the proposed policies for the Medicare Prescription Drug Inflation Rebate Program. 2. Medicare Part B Drug Rebates for Single Source Drugs and Biological Products With Prices That Increase Faster Than the Rate of Inflation a. Definitions (Sec. 427.20)

In the CY 2026 PFS proposed rule (90 FR 32634), we proposed to amend Sec. 427.20 by removing the term “Billing and payment code FDA approval or licensure date”. The term was not included in the CY 2025 PFS proposed rule. This term was intended to be used in the final rule at Sec. 427.302(c), as evidenced by references to it in the final rule (89 FR 98244). Prior to publication of the final rule, however, we ultimately incorporated the definition text in place of the defined term, rendering the defined term inoperative, and we neglected to delete the unused term. To avoid any confusion arising from superfluous regulatory text, we proposed to remove the definition.

We did not receive public comments on the proposed revision, and we are finalizing as proposed the revision to Sec. 427.20.

In the CY 2025 PFS final rule (89 FR 98579), we codified the definition of manufacturer in Sec. 427.20 to have the meaning set forth in section 1847A(c)(6)(A) of the Act. As articulated in the CY 2025 PFS final rule (89 FR 98266), we will identify the manufacturer that is responsible for paying a rebate amount using the same approach used for identifying the manufacturer that is responsible for reporting ASP and Medicaid Drug Rebate Program (MDRP) data. In the CY 2026 PFS proposed rule (90 FR 32635), as a matter of operations, we clarified that CMS identifies the manufacturer with financial responsibility for the inflation rebate for a Part B rebatable drug by reviewing ASP data submissions for the current and historical reporting period(s) and the agency will also take into account, as applicable, manufacturer- identifying information in other CMS systems including MDRP.

We did not receive public comments on this issue. In operationalizing the Medicare Part B Drug Inflation Rebate Program for the first time, we have adopted this clarification with further refinements in our approach to ensure timely and appropriate manufacturer identification by taking into account, as applicable, manufacturer-identifying information in other government systems, including MDRP, and other public sources. b. Drugs Covered as Additional Preventive Services (DCAPS)

Medicare Part B covers “additional preventive services,” as defined under section 1861(ddd)(1) of the Act, that identify medical conditions or risk factors and that the Secretary determines are: (A) reasonable and necessary for the prevention or early detection of an illness or disability; (B) recommended with a grade of A or B by the United States Preventive Services Task Force; and (C) appropriate for individuals entitled to benefits under Part A or enrolled under Part B. Section 1861(ddd)(2) of the Act states that, in making determinations under section 1861(ddd)(1) of the Act, the Secretary shall use the process for making National Coverage Determinations (as defined in section 1869(f)(1)(B) of the Act) in the Medicare program. Section 1833(a)(1)(W)(ii) of the Act provides for the payment for additional preventive services, including drugs.

On September 30, 2024, CMS established coverage of certain drugs as an additional preventive service under section 1861(ddd)(1) of the Act for the first time.\350\ Such drugs covered as additional preventive services are referred to DCAPS, and we will use the term “DCAPS drug(s),”for ease of the reader.

\350\ See: Preexposure Prophylaxis (PrEP) Using Antiretroviral Therapy to Prevent Human Immunodeficiency Virus (HIV) Infection, available at https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&ncaid=310.

As described at Sec. 410.152(o)(3), CMS will determine the payment limit for the applicable billing and payment code for a DCAPS drug by applying the ASP methodology if ASP data is available (89 FR 98225). If ASP data is not available, then the payment limit would be determined using National Average Drug Acquisition Cost (NADAC) prices for the drug. If ASP data and NADAC prices are not available, the payment limit would be calculated using the Federal Supply Schedule (FSS) prices for the drug. If ASP data, NADAC prices, and FSS prices are not available, the payment limit would be the invoice price determined by the Medicare Administrative Contractor (MAC).

In the CY 2026 PFS proposed rule (90 FR 32635), we proposed to address whether DCAPS drugs are Part B rebatable drugs, as discussed in the CY 2025 PFS final rule (89 FR 98250). We explained that the current set of drugs covered as DCAPS drugs meets the definition of a Part B rebatable drug under section 1847A(i)(2) of the Act (90 FR 32635). Therefore, we proposed to identify DCAPS drugs as Part B rebatable drugs as defined in section 1847A(i)(2) of the Act. Under this proposal, we would calculate rebates for DCAPS drugs in alignment with the methodology described in Sec. Sec. 427.300 through 427.402. Manufacturers of DCAPS drugs would receive reports of rebate amounts subject to the process and timing described in Sec. Sec. 427.500 through 427.505.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: A commenter supported CMS' proposal to designate DCAPS drugs as Part B rebatable drugs, stating that the proposal ensures that DCAPS drugs are treated consistent with other Part B drugs and will help control Medicare spending, ensure that price increases beyond inflation activate rebates, and protect Medicare enrollees from unnecessary cost increases.

Response: We appreciate the commenter for this support.

Comment: Some commenters opposed CMS' proposal to identify DCAPS as Part B rebatable drugs, stating that they believe CMS' interpretation of the IRA statute regarding DCAPS is inconsistent with prior policy to cover DCAPS as preventive services. Specifically, a few commenters noted that DCAPS are covered under Part B as “additional preventive services” under section 1861(ddd) of the Act rather than as separately payable drugs under section 1847A(i) of the Act. Therefore, a commenter noted it is inconsistent for CMS to cover DCAPS as an “additional preventive service” and still consider DCAPS to be eligible for inflation rebates as a “drug” under Part B. These commenters suggested CMS not to finalize this proposal and instead to clarify that DCAPS are not Part B rebatable drugs.

Additionally, a commenter expressed concern that CMS proposed this new policy without adequate interested parties' input, including soliciting the views of patients and clinicians, noting that this policy may have unintended consequences for treatment access. The commenter further stated that if CMS finalizes this proposed policy, CMS should provide greater transparency on the inclusion of DCAPS in the Part B inflation rebate requirements, but the commenter did not elaborate or provide an example.

Response: We appreciate commenters' feedback. We disagree with the suggestion that it is inconsistent to cover DCAPS drugs as “additional preventive services” and still considers DCAPS drugs to be Part B rebatable drugs. We maintain that the current set of drugs covered as DCAPS drugs meets the definition of a Part B rebatable drug under section 1847A(i)(2) of the Act. This definition does not exclude drugs on the basis that they are covered as additional preventive services under section 1861(ddd)(1) of the Act. Therefore, we will identify DCAPS drugs as Part B rebatable drugs as defined in section 1847A(i)(2) of the Act and calculate rebates for DCAPS drugs in alignment with the methodology described in Sec. Sec. 427.301 through 427.402.

In response to the comment regarding interested parties' input, we believe the 60-day comment period for the CY 2026 PFS proposed rule offered interested parties with sufficient time to provide input on this proposal, including on any potential unintended consequences regarding treatment access. We do not have sufficient information regarding the commenter's concerns about providing greater transparency on the inclusion of DCAPS drugs in the Part B inflation rebate requirements to provide a response. However, we note that interested parties may continue to provide input via the CMS IRA mailbox ([email protected]), which CMS established to receive queries related to the implementation of the Medicare Part B and Part D Drug Inflation Rebate Programs and the Medicare Drug Price Negotiation Program.

Comment: A commenter expressed concern that operationalizing Part B inflation rebates for DCAPS drugs could present challenges because the Part B inflation rebate calculation is based on the ASP-based payment methodology and ASP reporting for DCAPS drugs is voluntary. This commenter recommended that if CMS finalizes this policy as proposed, CMS should explicitly clarify that all Part B 340B claims modifier requirements apply to DCAPS drugs and that CMS should periodically assess the accuracy of the 340B claims modifier reporting for DCAPS drugs to ensure that covered entities are complying.

Response: We appreciate the commenter's concern about operationalizing this policy and acknowledge that ASP reporting for manufacturers of DCAPS drugs is voluntary. We encourage DCAPS drugs manufacturers to submit ASP data to CMS. As previously stated, (89 FR 98223), we continue to believe that ASP-based payment limits are the most accurate drug pricing methodology that is available to CMS. For these same reasons, we believe that using voluntarily reported ASP data is appropriate and there is available pricing information to warrant their inclusion at this time. Additionally, ASP data are available for some NDCs for the current set of DCAPS drugs and in instances when ASP data are not available, we will use WAC price data from other public sources. We reiterate that we will calculate rebates for DCAPS drugs in alignment with the methodology described in Sec. Sec. 427.301 through 427.402. Regarding application of 340B claim modifier requirements for DCAPS drugs, in accordance with the December 14, 2023 Revised Part B Inflation Rebate Guidance: Use of the 340B Modifier program guidance, we require all 340B covered entities to report the “TB” modifier, as applicable, on claim lines for separately payable DCAPS drugs. CMS will monitor the extent to which the 340B modifier is utilized on Part B claims for 340B-acquired DCAPS drugs.

After consideration of public comments, we have adopted this clarification. c. Billing Units That Are Packaged Into the Payment Amount for an Item or Service and Are Typically Not Separately Payable

Section 1847A(i)(3)(B)(ii)(II) of the Act requires that units that are packaged into the payment amount for an item or service and are not separately payable should be excluded from the total number of units of a billing and payment code for a Part B rebatable drug. As stated in the CY 2025 PFS final rule (89 FR 98247), we will remove billing units that are packaged into the payment amount for an item or service and are not separately payable. We codified this policy at Sec. 427.303(b)(3). We have identified rare instances where claims for separate payment have been submitted for a Part B rebatable drug when such claims are payable only as part of a bundled payment. In the CY 2026 PFS proposed rule (90 FR 32635), we clarified that we exclude units associated with such separately billed claims from the rebate calculation consistent with Sec. 427.303(b)(3).

We did not receive public comments on this issue, and we have adopted this clarification. d. Identification of the Payment Amount Benchmark Quarter (Sec. 427.302(c))

In the CY 2026 PFS proposed rule (90 FR 32635), we proposed at Sec. 427.302(c)(5) that if data needed to calculate the payment amount in the payment amount benchmark quarter as described in and determined under Sec. 427.302(d)(1) are not available in the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, CMS will use the third full calendar quarter after the Part B rebatable drug is assigned a billing and payment code as the payment amount benchmark quarter. Without a payment amount in the payment amount benchmark quarter, we would not be able to calculate Part B inflation rebates for such billing and payment

codes. We believe this approach will allow CMS to calculate a payment amount in the payment amount benchmark quarter, incorporating the two- quarter lag used to set payments in alignment with section 1847A of the Act. We made this proposal to address identified instances as described in section III.E.2.e. of this final rule.

This proposal required CMS to make technical edits to and to renumber regulations at Sec. 427.302(c). Therefore, we proposed conforming changes to Sec. 427.302(c) and to redesignate Sec. 427.302(c)(5) as Sec. 427.302(c)(6).

We did not receive public comments on this proposed provision, and we are finalizing as proposed the revisions to Sec. 427.302(c). e. Identification of the Payment Amount in the Payment Amount Benchmark Quarter (Sec. 427.302(d)(1))

Section 1847A(i)(3)(C) of the Act specifies use of the “payment amount for the billing and payment code for such drug in the payment amount benchmark quarter” (“payment amount in the payment amount benchmark quarter”) in the determination of the inflation-adjusted payment amount. As stated in the CY 2025 PFS final rule (89 FR 98244), to identify the payment amount in the payment amount benchmark quarter, we use the published payment limit for the billing and payment code for the applicable payment amount benchmark quarter. If the published payment limit is not available for the applicable benchmark quarter, we stated we will use the lower of 106 percent of ASP or 106 percent of WAC. However, we have identified instances in which some or all NDCs in a billing and payment code have zero or negative ASP or WAC values. Using such data could result in a payment amount in the payment amount benchmark quarter that is zero, negative, or inappropriately low due to the inclusion of the zero or negative ASP or WAC values. In addition, when the published payment limit is not available, using 106 percent of ASP or 106 percent of WAC to calculate the payment amount in the payment amount benchmark quarter may not be appropriate in instances where the payment limit is based on a different amount, such as in the case of Part B rebatable drugs that are biosimilars for which the add- on amount reflects the payment amount for the reference biological product (as set forth in section 1847A(b)(8) of the Act). For the purposes of calculating a payment amount under the statute, CMS finalized in the CY 2025 PFS final rule (89 FR 97981) that negative or zero manufacturer's ASP data are considered “not available”. We also note that the published payment limit for a drug with negative or zero ASP data reported after January 1, 2025, could be based on a positive amount that is carried forward from a previous quarter in accordance with Sec. 414.904(i).

In the CY 2026 PFS proposed rule (90 FR 32636), we proposed to remove from Sec. 427.302(d)(1) “determined under section 1847A of the Act”. This text was inadvertently included in the CY 2025 PFS final rule (89 FR 98583) and needs to be removed because the statutory provision governing the payment amount in the payment amount benchmark quarter, section 1847A(i)(3)(C)(i) of the Act, does not limit that amount to payment amounts determined under section 1847A of the Act and because the payment limits for some Part B rebatable drugs are not determined under section 1847A of the Act.

Additionally, we proposed to revise Sec. 427.302(d)(1)(i) by removing “If a published payment limit is not available for the applicable payment amount benchmark quarter, CMS will use the lower of 106 percent of manufacturer-reported ASP or 106 percent of manufacturer-reported WAC” (90 FR 32636). We also proposed to revise Sec. 427.302(d)(1)(ii) by removing “If neither a published payment limit nor manufacturer-reported ASP or WAC data are available, CMS will use WAC data from other public sources to calculate 106 percent of WAC, which, solely for the purposes of this section, CMS will consider to be the payment amount for the payment amount benchmark quarter.” If a published payment limit is not available for the applicable payment amount benchmark quarter, at Sec. 427.302(d)(1)(i), we proposed to calculate the payment amount in the payment amount benchmark quarter using positive ASP or positive WAC data reported by manufacturers to the ASP Data Collection System.\351\ Additionally, at Sec. 427.302(d)(1)(ii), if neither positive ASP nor positive WAC data are available in the ASP Data Collection System for the given quarter, we proposed to use WAC data from other public sources for the given quarter to calculate the payment amount in the payment amount benchmark quarter. We believe these proposals would allow CMS to calculate a payment amount in the payment amount benchmark quarter that aligns with section 1847A of the Act, rather than strictly limiting this calculation to the lower of 106 percent of ASP or 106 percent of WAC as reported for a given drug, as previously stated in the CY 2025 PFS final rule (89 FR 98244), which may not align with CMS' policy for calculating payment limits under Sec. 414.904. Under this proposed approach, we would also avoid calculating inappropriately large inflation rebate amounts for drugs that had zero or negative sales in their payment amount benchmark quarter.

\351\ Available at https://portal.cms.gov/portal/.

We did not receive public comments on this proposed provision, and we are finalizing as proposed the revisions at Sec. 427.302(d)(1). f. Reports of Rebate Amounts, Reconciliation, Suggestion of Error, and Payments (Sec. Sec. 427.500 Through 427.505)

Section 1847A(i)(1)(A) of the Act requires the Secretary to provide a report to each manufacturer of a Part B rebatable drug with the following information not later than 6 months after the end of an applicable calendar quarter: (1) the total number of billing units for each Part B rebatable drug; (2) the amount, if any, of the excess average sales price increase (the amount by which the specified amount exceeds the inflation-adjusted payment amount as calculated at Sec. 427.302(g)) for an applicable calendar quarter; and (3) the rebate amount for the Part B rebatable drug. In compliance with section 1847A(i)(1)(B) of the Act, manufacturers of a Part B rebatable drug must provide a rebate for each Part B rebatable drug no later than 30 calendar days after the receipt of the information provided by the Secretary in section 1847A(i)(1)(A) of the Act.

As we explained in the CY 2026 PFS proposed rule (90 FR 32636), in accordance with Sec. Sec. 427.504 and 427.505, CMS has established a standard method and process to issue Rebate Reports to manufacturers of Part B rebatable drugs and to accept manufacturer rebate payments. CMS has established an Online portal, the “Manufacturer Payment Portal” (MPP),\352\ administered by a CMS contractor, through which manufacturers will access their Rebate Reports, submit Suggestions of Error, as applicable, and pay rebate amounts due, as described at Sec. Sec. 427.504 and 427.505. Manufacturers of Part B rebatable drugs should provide points of contact to view the rebate reports described at Sec. Sec. 427.501 and 427.502, enter and modify banking information, and

initiate payment of rebate amounts through the MPP.

\352\ See: https://www.cms.gov/files/document/medicare-prescription-drug-inflation-rebate-program-onboarding-memo.pdf.

We did not make any proposals associated with the method and process to issue Rebate Reports to manufacturers of Part B rebatable drugs and to accept manufacturer rebate payments in the CY 2026 PFS proposed rule. We did not receive public comments on these policies. i. Rebate Reports and Reconciliation (Sec. 427.501)

As stated in the CY 2025 PFS final rule (89 FR 98264), we codified a multistep process to provide a manufacturer, as defined at Sec. 427.20, with the rebate information specified in section 1847A(i)(1)(A) of the Act. Specifically, in the CY 2025 PFS final rule (89 FR 98264), CMS established the information that will be included in a Rebate Report at Sec. 427.501, including the NDC(s) and billing and payment codes identified for the Part B rebatable drug, the total number of billing units, the applicable calendar quarter, and the rebate amount due, among other items specified at Sec. 427.501. Consistent with the approach specified in section 80.3 of the Medicare Part B Drug Inflation Rebate Guidance, published December 14, 2023, we proposed in the CY 2026 PFS proposed rule to add paragraph (c)(3) at Sec. 427.501 to clarify that CMS would report the manufacturer's rebate amount due as a dollar amount that is rounded to the nearest cent (90 FR 32636). CMS did not specify an approach to reporting of the rebate amount in the CY 2025 PFS final rule and we believe it is necessary to provide this information to manufacturers to provide notice of CMS' approach to rounding of the rebate amount. The calculation steps specified in subpart D of part 427 will not include rounded values.

We did not receive public comments on this proposed provision to add paragraph (c)(3) in Sec. 427.501, and we are finalizing as proposed at Sec. 427.501(c)(3).

In the CY 2025 PFS final rule (89 FR 98265), to determine which data elements would be included when CMS reports the rebate amount to the manufacturer, we stated that we considered the statutory requirements outlined in section 1847A(i)(1)(A)(i) through (iii) of the Act to determine what information is necessary for manufacturers to review the accuracy of the rebate amount while also protecting proprietary information. As stated on page 98578 of the CY 2025 PFS final rule, CMS structured a two-step reporting process to first include a Preliminary Rebate Report to provide an initial notice to manufacturers regarding whether they may owe a rebate amount, followed by the Rebate Report. Further, we proposed and finalized additional data elements within the Preliminary Rebate Reports and the Rebate Reports not listed in statute based on input from public comments (for example, the applicable benchmark period, the rebate period CPI-U). CMS did not finalize additional elements suggested, such as claims-level data, after weighing whether any such additional information fulfilled CMS' statutory obligation and the potential benefits to manufacturers against the administrative burden additional reporting would impose on the agency and operational feasibility. The data elements set forth in Sec. 427.501(b)(1) and (c)(1) satisfy these considerations.

In the CY 2026 PFS proposed rule, CMS clarified that certain data elements provided to manufacturers in Preliminary Rebate Reports, Rebate Reports, and reconciled reports of a rebate amount (which may each include the same elements, revised as applicable due to updates in the data), are provided to manufacturers of a Part B rebatable drug in a manner consistent with sections 1927(b)(3)(D) and 1847A(f)(2)(D) of the Act. Section 1927(b)(3)(D) of the Act specifies that information disclosed by manufacturers or wholesalers under section 1927(b)(3) (submissions of drug product and pricing information under the National Drug Rebate Agreement (NDRA)) or under a Master Agreement with the Secretary of Veterans Affairs (other than WAC) is confidential and shall not be disclosed by the Secretary in a way that discloses the identity of a specific manufacturer or wholesaler, prices charged for drugs by such manufacturer or wholesaler, except as otherwise allowed in section 1927(b)(2)(D)(i) through (vii) of the Act. Section 1927(b)(3)(D)(i) of the Act provides an exception to this confidentiality requirement as the Secretary determines to be necessary to carry out certain sections of the Act, including section 1847A of the Act (that is, the Part B Drug Inflation Rebate Program). Section 1847A(f)(2)(D) of the Act contains parallel confidentiality protections for ASP information reported by manufacturers and wholesalers, including a parallel exception for purposes of Part B rebate effectuation, and would apply to ASP data reported by entities that do not have a NDRA and that report ASP data outside the MDRP.

Specifically, CMS anticipates that most data included in Preliminary Rebate Reports, Rebate Reports, reconciled Preliminary Rebate Reports, and reconciled Rebate Reports will not implicate sections 1927(b)(3)(D) or 1847A(f)(2)(D) of the Act, as CMS anticipates that in most cases the party that will receive these reports will be the same party that reported the relevant information. However, CMS acknowledges that some situations may raise a possibility of disclosure by the Secretary of AMP or ASP information, or information derived therefrom, to a party besides the party that reported the information originally; such situations could implicate section 1927(b)(3)(D) and/ or section 1847A(f)(2)(D) of the Act. Such situations may include, but are not necessarily limited to: (1) transfer of a rebatable drug from one manufacturer to another manufacturer, such that the manufacturer identified in the Rebate Report differs from the manufacturer that originally reported certain benchmark pricing information; and (2) cases in which CMS displays a specified amount, the total HCPCS units, and the proportion of manufacturer-reported ASP units for reports associated with grouped HCPCS codes. In instances where the parties may be different, CMS emphasizes that the data included in a report of the rebate amount is based on CMS' independently performed calculations. Although these calculations rely on information disclosed by manufacturers as inputs, in most cases the data reported in a Preliminary Rebate Report and a Rebate Report (or a reconciled version of these reports) will not be identical to the information reported by manufacturers (for example, manufacturers report ASP data at the NDC-11 level, whereas the payment amount in the payment amount benchmark quarter reflects an aggregated, HCPCS-level value that was calculated using the NDC-11-level ASP data). Therefore, reporting such data elements to another manufacturer for purposes of the Medicare Part B Drug Inflation Rebate Program would not violate the confidentiality requirements in sections 1927 and 1847A of the Act.

Second, in the CY 2025 PFS final rule (89 FR 98266), CMS stated that the purpose of providing additional data elements not explicitly listed in sections 1847A(i)(1)(A)(i) through (iii) of the Act (for example, the payment amount in the payment amount benchmark quarter, specified amounts, and certain unit data) is based on CMS' assessment of “data elements are necessary [for a manufacturer] to review the Preliminary Report for a Suggestion of Error.” Providing these data in the Preliminary Rebate Report (and corresponding subsequent reports) ensures that: (1) manufacturers will be able to submit a Suggestion of Error, thereby promoting

accuracy in the implementation of the rebate program; and (2) manufacturers will have advanced notice of a potential rebate amount due. Section 1847A(i)(1)(A)(i) of the Act specifies that for each Part B rebatable drug, the Secretary shall report to each manufacturer information on the total number of units of the billing and payment code. However, this level of information alone is not sufficient to support CMS' goal of providing enough information for a manufacturer to submit a Suggestion of Error, if necessary. For Part B rebatable drugs, it is necessary to provide the proportion of ASP-reported units in addition to providing the total HCPCS units (as required by statute) so that the manufacturer has sufficient information to understand the total rebate amount calculated. We acknowledge that by providing the proportion of ASP-reported units, a manufacturer could estimate the proportion of ASP-reported units for another drug(s) included in the same HCPCS code. However, we believe that providing this information is necessary to carry out the rebate program because it enables manufacturers to submit a potential Suggestion of Error, which promotes accuracy in the calculation of the rebate amount.

We did not make any proposals associated with the data elements provided to manufacturers of Part B rebatable drugs in Preliminary Rebate Reports, Rebate Reports, and reconciled reports of a rebate amount in the CY 2026 PFS proposed rule. We did not receive public comments on these policies. ii. Rebate Report for Applicable Calendar Quarters in CY 2023 and CY 2024 (Sec. 427.502)

As stated in the CY 2025 PFS final rule (89 FR 98271), we codified at Sec. 427.502 the option afforded to CMS in section 1847A(i)(1)(C) of the Act to delay sending the information required by section 1847A(i)(1)(A) of the Act for applicable calendar quarters in calendar years 2023 and 2024 until not later than September 30, 2025. Specifically, per Sec. 427.502, CMS issued one report for the 4 applicable calendar quarters in CY 2023 and one report for the 4 applicable calendar quarters in CY 2024. Additionally, CMS will send a reconciled rebate amount for the four applicable calendar quarters in CY 2024 9 months after the Rebate Report, to allow for 12 months of claims run-out for each applicable calendar quarter. We stated in the CY 2025 PFS proposed rule (89 FR 61959) that this approach aligns claims and payment data run-out with the run-out used during a regular reconciliation cycle. However, CMS finalized the regulatory text specifying the time periods for regular reconciliation cycles at Sec. 427.501(d) with text that provides CMS with operational flexibility as to the exact date the report with the reconciled rebate amount will be provided to each manufacturer of a Part B rebatable drug by including the word “within” prior to the specified date. In the CY 2026 PFS proposed rule (90 FR 32637), we proposed to amend Sec. 427.502(c)(2)(ii) to add the word “within” prior to “nine months” to be consistent with the regulatory text and cadence for regular reconciliation cycles as well as to provide operational flexibility on the timing of the release of the report with the reconciled rebate amount.

We did not receive public comments on this proposed provision, and we are finalizing as proposed at Sec. 427.502(c)(2)(ii). 3. Medicare Part D Drug Rebates for Certain Drugs and Biologicals With Prices That Increase Faster Than the Rate of Inflation a. Clarification Regarding the Payment Amount Benchmark Period for Certain Subsequently Approved Drugs

In the CY 2025 PFS final rule (89 FR 98280), CMS finalized policies to identify the payment amount benchmark period as set forth in Sec. 428.202(c). At Sec. 428.202(c)(2), we finalized that for a subsequently approved drug, the payment amount benchmark period is the first calendar year beginning after the drug's first marketed date. At Sec. 428.202(c)(4), we finalized that, notwithstanding Sec. 428.202(c)(2), for a subsequently approved drug for which there are no quarters during the first calendar year beginning after the drug's first marketed date for which AMP has been reported under section 1927(b)(3) of the Act for the NDC-9, including information as set forth in Sec. 428.202(d)(3), the payment amount benchmark period is the first calendar year in which such NDC-9 has at least 1 quarter of AMP reported.

At Sec. 428.202(c)(3), we specified that the payment amount benchmark period must be no earlier than calendar year 2021 for a Part D rebatable drug first approved or licensed by the FDA on or before October 1, 2021, for which there are no quarters during the period beginning on January 1, 2021, and ending on September 30, 2021, for which AMP has been reported under section 1927(b)(3) of the Act for the NDC-9, including information as set forth in Sec. 428.202(d)(3). At the time of development for rulemaking on the CY 2025 PFS, we did not believe it was necessary to clarify at Sec. 428.202(c)(2) or (c)(4) that the payment amount benchmark period for a subsequently approved drug also must be no earlier than calendar year 2021, since a subsequently approved drug is by definition a Part D rebatable drug first approved or licensed by the FDA after October 1, 2021.

However, we have identified rare instances in which a subsequently approved drug's first marketed date precedes the FDA approval date reported under section 1927(b)(3)(A)(v) of the Act. It is therefore possible that a subsequently approved drug could have a first marketed date prior to 2020; in other words, the first calendar year beginning after the drug's first marketed date could precede 2021. The definition of the payment amount benchmark period at section 1860D-14B(g)(3) of the Act and the description of a subsequently approved drug at section 1860D-14B(b)(5)(A) of the Act suggest that a Part D rebatable drug should not have a payment amount benchmark period prior to 2021. As such, in the CY 2026 PFS proposed rule (90 FR 32638), we proposed to clarify that the payment amount benchmark period identified at Sec. 428.202(c)(1) through (c)(5) for a Part D rebatable drug will be no earlier than 2021 in all instances. We also proposed to clarify that the payment amount benchmark period set forth at Sec. 428.202(c)(3) or (c)(4) cannot precede the payment amount benchmark period set forth at Sec. 428.202(c)(1) or (c)(2), as applicable, for a Part D rebatable drug.

We did not receive public comments on this issue, and we have adopted this clarification. b. Clarification Regarding Calculation of the Benchmark Period Manufacturer Price or AnMP in Instances of Quarters With Monthly Units But no Quarterly AMP

In the CY 2025 PFS final rule (89 FR 98287), CMS established policies for calculating the benchmark period manufacturer price and AnMP, as applicable, in situations in which certain data are missing but CMS still has sufficient data to complete the calculations. At Sec. 428.202(g)(1), we finalized that if there is 1 or more quarter(s) in the payment amount benchmark period or applicable period for which a manufacturer has not reported units under section 1927(b)(3)(A)(iv) of the Act but has reported AMP under sections 1927(b)(3)(A)(i)(I) and (ii) of the Act, CMS will calculate the benchmark period manufacturer price or AnMP, as

applicable, using data only from quarter(s) with units.

In the CY 2026 PFS proposed rule (90 FR 32638), we clarified that we are taking the same approach for the inverse scenario. That is, if there is 1 or more quarter(s) in the payment amount benchmark period or applicable period for which a manufacturer has not reported AMP under sections 1927(b)(3)(A)(i)(I) and (ii) of the Act but has reported units under section 1927(b)(3)(A)(iv) of the Act, CMS will calculate the benchmark period manufacturer price or AnMP, as applicable, using data only from quarter(s) with AMP. In other words, when a manufacturer has not reported AMP for a quarter but has reported units for months in that quarter, CMS will not use the units from that quarter in the calculation of the benchmark period manufacturer price or AnMP, as applicable. To the extent that a manufacturer reports a quarterly AMP value of zero for a given quarter, CMS will not consider zero to be a valid value and will instead consider AMP to be missing for that quarter.\353\

\353\ See CMS instructions for reporting AMP when a zero or negative value occurs. For example: https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/rx-releases/mfr-releases/mfr-rel-038.pdf and https://www.medicaid.gov/sites/default/files/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/rx-releases/mfr-releases/mfr-rel-080.pdf.

We will monitor this approach and may modify our policy in the future. We also remind manufacturers of their reporting obligations under section 1927(b) of the Act and Sec. 447.510 of this title and that failure to provide timely information required under those authorities may result in penalties as detailed in section 1927(b)(3)(C)(i) of the Act.

We did not receive public comments on this issue, and we have adopted this clarification. c. Exclusion of 340B Acquired Units From Part D Rebatable Drug Requirements (Sec. 428.203(b)(2))

Section 1860D-14B(b)(1)(B) of the Act requires that beginning with the plan year 2026, CMS shall exclude from the total number of units for a Part D rebatable drug, for an applicable period, those units for which a manufacturer provided a discount under the 340B Program. Because this requirement starts after the first quarter of the applicable period that begins on October 1, 2025, the exclusion of 340B units will only apply for the last three quarters of this applicable period. That is, CMS will exclude 340B units starting on January 1, 2026.

As we stated in the CY 2025 PFS final rule (89 FR 98289), data on which units dispensed under Part D and covered by Part D plan sponsors were purchased under the 340B Program is unavailable from the data sources specified at section 1860D-14B(d) of the Act (that is, information submitted by manufacturers, States, and Part D plan sponsors), and we do not currently have access to this data through other means. We understand that the 340B status of a Part D drug is usually not known by the dispenser at the point-of-sale, and that 340B covered entities (hereinafter “covered entities”) typically identify the 340B status of a Part D drug retrospectively. Because the covered entity and CMS do not exchange dispensed Part D drug information confirming the 340B status of a Part D rebatable drug, we are unable to precisely identify 340B units at the claim-level based solely on Part D claims submitted to CMS by the covered entity. For these reasons, in the CY 2026 PFS proposed rule (90 FR 32639), we proposed a claims-based methodology to exclude 340B units starting on January 1, 2026. Additionally, we proposed establishing a voluntary 340B repository for data from covered entities about 340B units that we anticipate will allow for CMS to identify 340B units at the claim level in future applicable periods (see 90 FR 32641). i. Summary of Policies Discussed in the CY 2025 PFS Final Rule

In the CY 2025 PFS proposed rule (89 FR 62245), to fulfill the statutory requirement to remove 340B units from rebate calculations beginning on January 1, 2026, we proposed at Sec. 428.203(b)(2)(i) to exclude from the total number of units determined under Sec. 428.203(a), units for which a manufacturer provided a discount under the 340B Program (“340B units”). At Sec. 428.203(b)(2)(ii), we proposed to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program and that were dispensed during the applicable period.

In the CY 2025 PFS proposed rule (89 FR 61971), CMS also solicited comments on a Medicare Part D Claims Data 340B Repository (hereinafter, “340B repository”). This approach would require that covered entities submit certain data elements from Part D 340B claims to the 340B repository on a retrospective basis. In response to this comment solicitation, many commenters expressed strong support for a 340B repository.

In the CY 2025 PFS final rule (89 FR 98593), CMS finalized the proposal at Sec. 428.203(b)(2)(i) to exclude from the total number of units determined under Sec. 428.203(a) units for which a manufacturer provided a discount under the 340B Program (“340B units”), as well as the proposal at Sec. 428.203(b)(2)(ii) to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program and that were dispensed during the applicable period. CMS stated that it would explore avenues to implement section 1860D- 14B(b)(1)(B) of the Act, which requires the exclusion from the total number of units for a Part D rebatable drug those units for which a manufacturer provided a discount under the 340B Program starting January 1, 2026, through the establishment of a 340B repository.

In the CY 2026 PFS proposed rule, CMS did not repropose the estimation methodology proposed in the CY 2025 PFS proposed rule but did consider this estimation percentage as an alternative to the proposal in the CY 2026 PFS proposed rule, as described in section III.E.3.c.iii. of the CY 2026 PFS proposed rule titled “Alternative Policy Considered” (see 90 FR 32641). Rather, we proposed to implement Sec. 428.203(b)(2) using a claims-based methodology to remove 340B units beginning January 1, 2026 (see 90 FR 32639). We also proposed to establish a Part D claims data 340B repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying 340B units for removal in a future applicable period (see 90 FR 32642).

We received public comments that broadly addressed the 340B Program and our proposed approach to implement Sec. 428.203(b)(2) using a claims-based methodology and to establish a 340B repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying 340B units for removal in a future applicable period. The following is a summary of these general comments we received and our responses.

Comment: Some commenters raised the topic of burden associated with the proposed 340B units identification methodologies. A few commenters requested that the methodologies undergo pilot testing prior to use and any burden from these processes should not be shifted to prescribers or pharmacies. A few commenters

suggested a thoughtful implementation to ensure added administrative burden from 340B identification processes does not impede access for 340B hospitals.

Response: We appreciate the commenters' feedback. The proposed claims-based methodology does not require covered entities to provide information to CMS, as information needed for this approach is obtained from claims data and other existing data sources. The repository will begin accepting voluntary data submissions in 2026. The agency intends to utilize its experience receiving and assessing voluntary submissions to the repository beginning in 2026 to, among other things, refine its information collection practices to reduce any additional burden on covered entities associated with submissions to the repository.

Comment: A commenter expressed the opinion that the proposed methodologies do not go far enough to ensure the 340B Program functions as intended and does not prevent duplicate discounts between the 340B program and such programs as the Medicaid Drug Rebate Program and the Medicare Prescription Drug Inflation Rebate Program. Another commenter commended the proposed methodologies as progress over prior years' proposals but stated that they still fail to adequately address the issue of duplicate discounts across Federal programs and present a patchwork attempt to address 340B duplicate discounts across different programs.

Response: We appreciate the commenters' suggestions. The claims- based methodology proposed in the CY 2026 PFS proposed rule for identification of 340B units is exclusively for use in the Medicare Part D Drug Inflation Rebate Program to implement the statutory requirement at section 1860D-14B(b)(1)(B) of the Act to exclude from the calculation of Part D inflation rebates units for which a manufacturer provided a discount under the 340B Program. As previously discussed, the 340B repository is intended to, among other things, provide CMS with experience with which it will refine its information collection practices. We will evaluate the effectiveness of the proposed claims-based methodology, finalized herein, in identifying 340B units for exclusion from Part D inflation rebate calculations. The general function of the 340B Program and duplicate discounts among programs outside of the Part D Drug Inflation Rebate program is outside of the scope of this final rule.

Comment: A commenter requested that CMS extend the timeline for implementing the proposed 340B unit identification from January 1, 2026, to provide smaller manufacturers with more time for budgetary planning, legal review, and functional adjustments to operationalize any changes. A commenter encouraged the delay of 340B unit identification for the Medicare Part D Drug Inflation Rebate Program due to the added burden on 340B hospitals from the HRSA 340B Rebate Model Pilot Program beginning next year.

Response: We appreciate the commenters' feedback. Section 1860D- 14B(b)(1)(B) of the Act requires that beginning with the plan year 2026, we must exclude from the total number of units for a Part D rebatable drug, for an applicable period, those units for which a manufacturer provided a discount under the 340B Program. Because this requirement starts after the first quarter of the applicable period that begins in October 2025, we will exclude the 340B units starting on January 1, 2026.

Comment: A few commenters expressed broad concerns about any proposal that would overestimate 340B units, with a commenter expressing their belief that both the claims-based methodology and the 340B repository would overestimate 340B units, and another commenter stating that any methodology that overestimates 340B use could result in loss of resources that would harm patients who depend on the 340B Program. A commenter recommended CMS collaborate with 340B interested parties to develop more accurate and less burdensome methods but did not specify to which proposal they referred.

Response: We appreciate the commenters' feedback. We note that neither details regarding which methodology would overestimate 340B units, nor how such methodology would overestimate units, were provided by the commenters. If concerns were related to overestimation in the claims-based methodology, we refer readers to the comment summaries and our responses below on this topic. If the concerns were related to overestimation in the 340B repository, we remind readers that the 340B repository will be used to begin testing the usability of data voluntarily submitted by covered entities and will not be used to remove 340B units from Part D inflation rebate calculations at this time. We will take commenters' views on overestimation into account when evaluating the usability of 340B repository data. With regards to the comment expressing concern with a potential loss of resources due to overestimation of 340B units, we note that nothing in the claims- based methodology nor the 340B repository would affect the resources allocated to covered entities since neither affects the determination of 340B eligibility of claims.

With regard to the comment addressing accuracy and burden, the commenter did not provide specifics on their concerns or to which proposal they referred. However, we note that the claims-based methodology, which is the methodology that CMS will use to remove 340B units from Part D inflation rebate calculations beginning January 1, 2026, is a comprehensive analytic approach that has undergone rigorous testing and refinements, as described later in this section, and that makes use of the best data sources available to CMS at this time. Therefore, we believe that the claims-based methodology is appropriate and sufficient to implement section 1860D-14B(b)(1)(B) of the Act and Sec. 428.203(b)(2). Additionally, the claims-based methodology does not impose any burden on covered entities or manufacturers. For summaries of comments received on burden as it relates to the repository, we refer readers to the discussions in the Collection of Information Requirements section of this final rule, which highlights CMS' interest in and efforts to reduce any burden associated with voluntary submissions to the 340B repository. ii. Claims-Based Methodology To Remove 340B Units From Rebate Calculations

In the CY 2026 PFS proposed rule, we proposed to implement Sec. 428.203(b)(2) using a claims-based methodology \354\ to remove 340B units from the Part D inflation rebate calculations by evaluating whether a Prescription Drug Event (PDE) record is potentially 340B- eligible based on (1) the affiliation of the National Provider Identifier (NPI) of the prescriber associated with that PDE record with a registered covered entity, and (2) the designation of the dispensing pharmacy associated with that PDE record as a 340B contract pharmacy (hereinafter “Prescriber-Pharmacy Methodology”). See 90 FR 32639.

\354\ The 340B claims-based methodology described herein uses elements of the 340B simulation described in the published work: Nikpay, S., Bruno, J. P., & Carey, C. (2024). Recent court ruling could increase the size and administrative complexity of the 340B Program. Health affairs scholar, 2(12), qxae157. https://doi.org/10.1093/haschl/qxae157.

As proposed, for the Prescriber-Pharmacy Methodology, once a PDE record is identified as potentially 340B-eligible, the units associated with that PDE record would be removed from the

rebate calculation, that is, the units associated with that PDE record would be considered “340B units” and excluded from rebate calculations in implementing Sec. 428.203(b)(2). We understand that the determination of potential 340B-eligibility of a PDE record using the methodology described herein does not necessarily mean that the covered entity replenished (or can in the future replenish) the units at the 340B price, and we therefore believe the proposed claims-based methodology may overestimate the number of units that are units for which a manufacturer provided a discount under the 340B Program. Examples of PDE records that would be identified as being potentially 340B-eligible by the claims-based methodology, but for which the covered entity may not be able to make a corresponding purchase of the accumulated units at the 340B price, include those for which: (1) a drug manufacturer placed restrictions on the 340B contract pharmacy (hereinafter “contract pharmacy”) that resulted in a non-340B price; (2) the NDC dispensed on the claim was discontinued, in shortage, or generally unavailable from the pharmaceutical wholesaler; (3) the covered entity did not accumulate enough units to replenish a full bottle of the drug; or (4) the prescription was subsequent to care provided outside of a covered entity. The approach described in this section would identify PDE records as potentially 340B-eligible based on two criteria: (1) the prescriber with the NPI listed on the PDE record provides care at a covered entity, and (2) the pharmacy NPI on the PDE record is a contract pharmacy for that same covered entity.

To establish a list of providers considered to be 340B-affiliated providers, we proposed to first create a list of prescriber NPIs from PDE records with dates of service within each applicable period. This file would be generated at the prescriber-month level and capture prescriber NPIs with active billing histories for specific months within the applicable period. CMS would then crosswalk this list of prescriber NPIs and months to the provider fields \355\ on Medicare Fee-For-Service (FFS) Part A inpatient claims and Part B outpatient claims and professional claims to identify the Medicare Provider Numbers (MPNs) \356\ through which each prescriber NPI billed for each month that they were active in the PDE data. The resulting file would include prescriber NPI, MPN, and month combinations within the applicable period. We then proposed to filter the collated list of prescriber NPI and MPN combinations using the 340B Office of Pharmacy Affairs Information System (OPAIS) database,\357\ which records the available MPNs for covered entities that are actively participating in the 340B Program during the applicable period. Each prescriber NPI affiliated with an MPN that was also an active covered entity listed on the OPAIS database for that particular month would be considered a 340B-affiliated prescriber for the month within the applicable period.

\355\ Provider field types include billing, rendering, attending, operating, other, and referring.

\356\ There exist inconsistencies between how MPN is described in the 340B OPAIS database and the 2007 CMS System Manual, which states “In order to avoid confusion with the NPI, the Medicare/ Medicaid Provider Number (also known as the OSCAR Provider Number, Medicare Identification Number or Provider Number) has been renamed the CMS Certification Number (CCN).” For the purpose of this discussion, CMS uses MPN interchangeably with CCN.

See: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/r29soma.pdf.

\357\ See: https://340bopais.hrsa.gov/home.

CMS acknowledges that the 340B OPAIS database may not list all pharmacies that dispense 340B-eligible drugs, including covered entities that have “in-house” pharmacies that are not registered in the 340B OPAIS database and 340B-eligible State and territorial Aids Drug Assistance Programs (ADAPs) that access 340B prices through rebates after their purchase of the drug instead of receiving the discounted price at the time of purchase from a contract pharmacy registered in the 340B OPAIS database. We solicited comments on whether and how to account for this limitation in the identification of 340B dispenses in the Prescriber-Pharmacy Methodology. We received public comments on this comment solicitation. A summary of the comments we received, and our responses are included below. In addition, we acknowledge that not all covered entities have an MPN or report their MPN in the 340B OPAIS database, which may result in an inability for CMS to designate claims affiliated with such covered entities as being potentially 340B-eligible using this methodology. Notably, we understand that hospitals are required to report their MPN in the 340B OPAIS database if they intend to use 340B drugs for their Medicaid patients,\358\ and that hospitals make up the significant majority of 340B volume. To address the missing MPN scenarios, CMS solicited comments on a methodology to augment the prescriber NPI and MPN file described previously in this final rule by using NPI when the NPI is listed in the 340B OPAIS database, but MPN is not. We would use data sources such as CMS' Integrated Data Repository to map 340B OPAIS provided organizational NPIs to corresponding individual NPIs and MPN, when possible, to establish a supplemental list of prescriber NPIs that are associated with covered entities. Each prescriber NPI that is determined to be associated with a covered entity NPI, as listed in the 340B OPAIS database, would be considered a 340B-affiliated prescriber for the month within the applicable period. We solicited comments on the benefits of using this augmented 340B-affiliated prescriber NPI approach to address covered entities that do not have MPN's listed in the 340B OPAIS database that will help to ensure a broader possible combination of prescriber-covered entity pairings than using the covered entity's organizational NPI from the 340B OPAIS database alone, as well as alternative methods to consider for how CMS could address the described scenario.

\358\ See: https://www.hrsa.gov/opa/registration.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: A few commenters expressed support for CMS' proposal to augment the prescriber NPI and MPN file by using NPI when the NPI is listed in the 340B OPAIS database but an MPN is not. A few of these commenters supported this method because they believed it would result in a more accurate methodology, and another of these commenters stated that this approach appropriately handles situations where a covered entity does not have an MPN. A commenter requested that CMS clarify how it plans to account for the fact that the OPAIS database does not include MPNs for every covered entity. A few commenters raised the concern that using the MPN to identify covered entities or providers affiliated with them would be insufficient without additional, robust, and reliable NPI mapping for each organization.

Response: We appreciate the commenters' suggestions, and we understand that the association of MPN to the provider does not always correctly categorize the affiliated relationship between the provider and the covered entity. We believe that cross-walking NPI to MPN is a necessary step in utilizing publicly available information to establish a list of 340B providers, which is an essential element to provide a transparent Prescriber-Pharmacy Methodology. There does not exist a public account of providers

affiliated with covered entities, either through employment at covered entities or through provision of contracted services on behalf of covered entities.

After consideration of public comments, we are adopting the proposal with modifications described herein. Specifically, to address the limitation raised by commenters regarding the use of MPNs to identify covered entities and providers affiliated with them, CMS will additionally engage in mapping 340B OPAIS-provided organizational NPIs to corresponding individual NPIs and MPNs using data sources such as the CMS Integrated Data Repository to establish a supplemental list of prescriber NPIs associated with covered entities. The resulting augmented 340B-affiliated prescriber NPI file will help to ensure a broader possible combination of prescriber-covered entity pairings than using the covered entity's organizational NPI from the 340B OPAIS database alone. Additional modifications to enhance the accuracy and completeness of the claims-based methodology are described later in this rule.

Next, we proposed to use the 340B OPAIS database to identify registered contract pharmacies that have an active agreement with a covered entity in the 340B OPAIS database during months within the applicable period and develop a list of contract pharmacy names, addresses, and active months for each associated covered entity. We would then merge pharmacy NPIs onto this file using the name and address fields reported to the National Council for Prescription Drug Programs (NCPDP). We understand that matching the list of contract pharmacy names and addresses to the NCPDP database will not rely on the use of a single discrete data field and may require CMS to utilize a methodology that includes: (1) cleaning addresses to account for variations in spelling, abbreviations, punctuations, etc. between the pharmacy names and addresses from both sources; (2) geocode matching between the pharmacy addresses contained in each source; and (3) fuzzy string matching on pharmacy name and address fields after cleaning these fields. Specifically, CMS may conduct a cartesian join to generate potential matches between pharmacies from each data source located in the same State, limit these potential matches to pharmacies estimated to be within 0.2 miles of one another,\359\ and select a final match for each 340B OPAIS pharmacy based on fuzzy string matching between the pharmacy name and address fields in each database.\360\ We proposed to use a targeted analysis to conduct a manual review of this matching algorithm to identify and correct errors or omissions. CMS acknowledged that this matching algorithm may result in an inability to associate a small percentage of contract pharmacies with NPIs.

\359\ The 0.2 mile threshold was previously adopted in Nikpay, S., Bruno, J. P., & Carey, C. (2024). Recent court ruling could increase the size and administrative complexity of the 340B Program. Health affairs scholar, 2(12), qxae157. https://doi.org/10.1093/haschl/qxae157.

\360\ CMS proposed to use a fuzzy-matching approach that matches the similarity between the names and addresses. This approach first counts the characters that match. Next, it examines how close those characters are, accounting for transpositions in each name or address. Accounting for transpositions addresses common typing mistakes such as entering the right characters in the wrong order.

The output of the two preceding processes would be: (1) a month- level file containing 340B-affiliated prescriber NPIs and their associated MPNs and/or organizational NPIs, and (2) a month-level file containing pharmacy NPIs for contract pharmacies of covered entities and the MPNs or organizational NPIs of these covered entities. CMS would join these two files by MPN or organizational NPIs and month to create a month-level file containing 340B-affiliated prescriber NPIs and pharmacy NPIs for contract pharmacies associated with these covered entities. Based on preliminary analyses of this claims-based methodology, for most Part D drugs, CMS stated that we expect to remove about 10 percent to 35 percent of the total number of units \361\ determined under Sec. 428.203(a) used to calculate the total rebate amount determined under Sec. 428.201(a). We emphasized that this approximation is preliminary and may vary significantly across different Part D rebatable drugs.

\361\ The preliminary analysis does not take into account any additional methods discussed that would further augment the claims- based methodology for covered entities that do not have MPN's listed in the 340B OPAIS database.

We noted that a prescriber NPI may have multiple affiliated covered entities, and that a covered entity may have multiple contract pharmacies. Using this set of prescriber and pharmacy pairings, CMS would identify PDE records during the applicable period that have prescriber ID, service provider ID, and claim date fields that match one of the paired combinations of 340B-affiliated prescriber NPI, pharmacy NPI, and month. For PDE records that match against these pairings, the units associated with those PDE records would be considered 340B units and would be removed from the total number of units dispensed under Part D (as determined under Sec. 428.203) used to calculate the total rebate amount.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Some commenters expressed support for CMS' proposed claims-based methodology. A commenter believed that the proposed methodology strikes an appropriate balance between accuracy and reducing the reporting burden on providers and Part D plans. Another commenter supported CMS' claims-based Prescriber-Pharmacy Methodology to exclude 340B acquired units from calculations of Part D inflation rebates, as they believed that the proposed 340B repository had the potential to place additional burdens on covered entities, which they opposed. Some commenters viewed the proposed Prescriber-Pharmacy Methodology as an improvement over the estimation approach proposed in the CY 2025 PFS proposed rule. A commenter appreciated that the proposed Prescriber-Pharmacy Methodology is more granular than the estimation methodology proposed in the previous CY 2025 PFS proposed rule and acknowledged CMS attempts to improve upon last year's approach. A commenter believed that the proposed Prescriber-Pharmacy Methodology was better suited to meet the statutory obligation and less administratively burdensome than the proposed 340B repository. A few commenters expressed support for putting forth a proposal that did not require pharmacies to include a 340B claim indicator at the point of sale.

Response: We appreciate the commenters' support of CMS' proposed policies for the removal of 340B units from Part D inflation rebate calculations using the proposed claims-based methodology. As outlined in this final rule, We are adopting the proposal for the Prescriber- Pharmacy Methodology to determine the total number of units of a Part D rebatable drug which will be considered “340B units” and excluded when calculating a Part D inflation rebate as described at Sec. 428.203(b)(2) in order to implement section 1860D-14B(b)(1)(B) of the Act.

Comment: Many commenters raised concerns related to the proposed claims-based methodology outlined in the CY 2026 PFS proposed rule. Many commenters recommended that CMS reconsider a refined version of the proposed estimation methodology from the CY 2025 PFS proposed rule, believing that the claims-based methodology outlined in the CY 2026 PFS proposed rule was a less accurate

alternative. While many commenters recognized CMS' efforts to develop an approach to address the removal of 340B units in the inflation rebate calculation, and CMS' efforts to be responsive to prior feedback on proposed methodologies, these commenters believed that CMS should reconsider any methodology that estimates or approximates 340B units and should instead develop a more accurate accounting of 340B claims data to calculate the appropriate number of units of a Part D rebatable drug for which a discount was provided under the 340B Program for the applicable period that begins on October 1, 2025. Some commenters stated that any estimation methodology could be considered imprecise and likely would not provide a complete accounting of all Part D 340B claims. A few commenters believed that the proposed approach was inconsistent with statutory requirements in section 1860D-14B(b)(1)(B) of the Act and that any methodology that does not accurately identify every eligible 340B unit does not align with Congress's mandate. Many commenters highlighted areas that they believed were limitations of the proposed claims-based estimation methodology. In addition to the limitations described in the CY 2026 PFS proposed rule, commenters noted concerns with the accuracy of the methodology, the potential for some 340B discounts provided to covered entities to not be identified by the methodology, the burden that will be taken on by the agency to implement such a methodology, and the cost and lack of transparency in the calculated 340B units to remove from the rebate calculation. Some commenters requested that CMS require the use of 340B and non-340B claims indicators appended to submitted Part D claims to more accurately identify 340B claims. Additionally, some commenters requested that CMS expedite the implementation of the repository instead of pursuing the proposed claims-based methodology. A few commenters requested that CMS only use a methodology that approximates the number of 340B claims for as short a period as possible and stated their belief that moving toward a repository or solution that ensures accurate identification and exclusion of 340B claims is the best, most accurate path. A commenter stated that the proposed claims-based methodology to remove 340B units from the inflation rebate calculation contradicts the expectations CMS has for manufacturers to comply with statutory requirements specified at section 1193(d)(2) of the Act to provide the maximum fair price to dispensing entities in a nonduplicated manner with the 340B ceiling price. Specifically, the commenter stated CMS policy in Medicare Drug Price Negotiation Program guidance states that the NPI alone is insufficient to determine 340B eligibility.

Response: As outlined in the CY 2025 PFS final rule (89 FR 98291), after considering the data limitations of the proposed estimation methodology and public comments that highlighted related concerns and limitations of this approach, we did not finalize the proposed estimation methodology for the applicable period beginning on October 1, 2025. We would like to reiterate that, as we stated in the CY 2025 PFS final rule (89 FR 98289), data on which units dispensed under Part D and covered by Part D plan sponsors were purchased under the 340B Program is unavailable from the data sources specified at section 1860D-14B(d) of the Act (that is, information submitted by manufacturers, States, and Part D plan sponsors), and we do not currently have access to this data through other means. We believe the Prescriber-Pharmacy Methodology is appropriate, transparent, and consistent with CMS' authority under sections 1860D-14B(b)(1)(B), 1102(a), and 1871(a)(1) of the Act, the latter of which provides the authority to make rules and regulations as necessary for the efficient administration of programs, including the Medicare Part D Drug Inflation Rebate Program. We intend to use the described methodology unless and until a different method to remove 340B units is proposed and finalized. As stated in the CY 2025 PFS proposed rule (89 FR 61972), we understand that the dispensing entity may not know the 340B status of a Part D drug at the point of sale and that covered entities may identify the 340B status of a Part D drug retrospectively. Therefore, we believe there may be more reliable and/or less burdensome ways to identify drugs that are subject to a 340B discount that were dispensed under Medicare Part D than requiring a 340B indicator to be included on the PDE record. Additionally, we do not believe a claims indicator is needed to report covered Part D drugs or biological products that were not purchased under the 340B Program.

Regarding the comment related to the comparison of policies set forth in the Medicare Drug Price Negotiation Program and Medicare Part D Drug Inflation Rebate Program with regard to use of NPI as confirmation of a Part D claim's 340B status, we believe that the Prescriber-Pharmacy Methodology for identifying 340B units is not in contradiction with policies set forth in Medicare Drug Price Negotiation Program guidance. CMS outlines in section 40.4.5 of the Medicare Drug Price Negotiation Program final guidance for initial price applicability year 2027 and for initial price applicability year 2028 that a “provider or prescriber ID alone generally will not constitute sufficient evidence that a claim was 340B- eligible,”362 363 meaning a manufacturer must be able to provide other evidence to conclude a claim was 340B-eligible to fulfill its statutory obligations under section 1193(d)(2) of the Act. CMS applies this same principle to the Prescriber-Pharmacy Methodology outlined in this final rule, which also does not use provider or prescriber ID alone and instead uses a robust data analysis where the prescriber NPI is representative of a select input in the ultimate identification and assessment related to the potential 340B eligibility of a Part D claim.

\362\ Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191--1198 of the Social Security Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028, https://edit.cms.gov/files/document/ipay-2028-final-guidance.pdf.

\363\ Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191--1198 of the Social Security Act for Initial Price Applicability Year 2027 and Manufacturer Effectuation of the Maximum Fair Price in 2026 and 2027, https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.

Comment: Many commenters stated that the proposed claims-based methodology relies on missing or incomplete information. A few commenters stated that missing information may lead manufacturers to be held responsible for inflation rebates on claims that were replenished at a 340B discount. A few commenters stated that the claims-based methodology does not actually identify whether the prescription was filled for a drug purchased at the 340B price and only informs if the claim may have been 340B -eligible. Another commenter stated the OPAIS registration of a contract pharmacy with a covered entity does not preclude that pharmacy from dispensing 340B and non-340B units.

Some commenters stated that the OPAIS database does not contain a complete accounting of the whole universe of registered covered entities, may not contain the requisite information (such as all covered entities' registered MPNs or NPIs) to match accurately using the proposed

Prescriber-Pharmacy methodology, and that not all contract pharmacies are correctly identified in the 340B OPAIS database. Further, many commenters acknowledged that the 340B OPAIS database may not account for “in-house” pharmacies of covered entities and that these pharmacy types are often not listed as contract pharmacies of covered entities on the 340B OPAIS database and would not capture 340B -eligible claims from this pharmacy type. A few commenters reported that the sector of pharmacies occupied by covered entity owned or covered entity “in- house” pharmacies has experienced significant growth because of covered entities investing in this space, outpacing the growth of other types of pharmacies. A few commenters recommended that CMS consider matching addresses listed in the “Shipping Addresses” section of the 340B OPAIS database as additional locations that could be dispensing 340B-eligible claims on behalf of a covered entity in order to more accurately identify “in-house” pharmacies or pharmacies dispensing 340B-eligible drug on behalf of a covered entity but not registered as contract pharmacies in the 340B OPAIS database. A commenter noted that the Medicaid Exclusion File (MEF) on the 340B OPAIS database is not designed to represent a comprehensive inventory of all covered entities' billing information.

Response: We appreciate the commenters' feedback. We acknowledged in the CY 2026 PFS proposed rule that not all pharmacies that dispense 340B-eligible drugs are registered in the 340B OPAIS database, including covered entities with “in-house” pharmacies, and that units of 340B-eligible drugs dispensed from pharmacies not registered in the 340B OPAIS database would not be identified as 340B-eligible using the Prescriber-Pharmacy Methodology, and we solicited comment on ways to improve the methodology to enhance completeness and accuracy of the data sources used. To address this limitation, we are adopting the approach recommended by interested parties to use the “Shipping Addresses” listed for each covered entity in the OPAIS database as an additional location that may dispense 340B-eligible drugs on behalf of the covered entity. By incorporating this enhancement to the Prescriber-Pharmacy Methodology as suggested by commenters, based on preliminary analysis, CMS expects to identify additional “in-house” pharmacies and pharmacies that are not registered as contract pharmacies in the 340B OPAIS database, but that do dispense 340B drugs on behalf of a covered entity. We will use a similar matching methodology to the methodology described in the CY 2026 PFS proposed rule to match contract pharmacy locations to registered pharmacy locations in the NCPDP database using geocode matching, fuzzy string matching, a cartesian join, and manual review as needed to identify NPIs that are associated with the “Shipping Address.” With regards to the comment about the MEF, the MEF is used exclusively for purposes of the Medicaid program and is not used in the Prescriber-Pharmacy Methodology.

We believe adopting these additional measures and incorporating them into the already robust methodologic approach described addresses the concerns raised by commenters about using the 340B OPAIS database in CMS' methodology for calculating the number of 340B units to be removed from the Part D inflation rebate calculations. Because the covered entity and CMS do not exchange dispensed Part D drug information confirming the 340B status of a Part D rebatable drug, we are unable to precisely identify 340B units at the claim-level based solely on Part D claims submitted to CMS by the covered entity. We believe that the Prescriber-Pharmacy Methodology as proposed in this final rule, which incorporates enhancements to address identified limitations such as “in-house” pharmacies, as recommended by commenters, represents an appropriate accounting of 340B units to remove in the calculation of a manufacturer's inflation rebate liability. We believe this approach is an additional measure to further address the limitations raised by commenters.

Comment: A commenter requested that CMS consider allowing manufacturers to report errors in the prescriber-pharmacy pairings to improve the accuracy of the Prescriber-Pharmacy Methodology. Further, a few commenters requested that CMS allow manufacturers to identify and submit data to correct perceived errors in the calculation of 340B units using the Prescriber-Pharmacy Methodology.

Response: We appreciate the comments requesting opportunities to identify errors in the Prescriber-Pharmacy Methodology through identification of errors in prescriber-pharmacy pairings or through reporting of errors in the calculated number of 340B units based on the Prescriber-Pharmacy Methodology. Section 1860D-14B(f) of the Act, codified at Sec. 428.403(a)(1), precludes administrative or judicial review of the determination of units as set forth at Sec. 428.203, the determination of whether a drug is a Part D rebatable drug as set forth at Sec. 428.101, and the calculation of the rebate amount as set forth at Sec. 428.201(a) inclusive of any reconciled rebate amount. As explained in the CY 2025 final rule (89 FR 98307), the Suggestion of Error process will be limited to mathematical steps involved in determining the rebate amount, and the elements precluded from administrative or judicial review will not be considered in-scope for the Suggestion of Error process. Therefore, CMS decline the request to allow manufacturers to report errors in the calculated number of 340B units from the Prescriber-Pharmacy Methodology through the Suggestion of Error process or a separate process.

As earlier stated, because the covered entity and CMS do not exchange dispensed Part D drug information confirming the 340B status of a Part D rebatable drug, we are unable to precisely identify 340B units at the claim-level based solely on Part D claims submitted to CMS by the covered entity. Therefore, we believe that the Prescriber- Pharmacy Methodology as described in this final rule, which incorporates enhancements to address identified limitations such as “in-house” pharmacies, as recommended by commenters, represents an appropriate accounting of 340B units to remove in calculation of a manufacturer's inflation rebate liability. We anticipate that after adopting the measures described to reduce the risk of undercounting 340B units, its Prescriber-Pharmacy Methodology using the 340B OPAIS database provides a reasonably accurate identification of the total number of 340B units for the applicable period. Additionally, as earlier outlined in more detail, we understands that the determination of potential 340B-eligibility of a PDE record using the methodology described herein does not necessarily mean that the covered entity replenished (or can in the future replenish) the units at the 340B price, and we therefore believe it is more probable that the proposed claims-based methodology may overestimate the number of units that are units for which a manufacturer provided a discount under the 340B Program, than undercount 340B units.

Comment: Many commenters provided feedback that the proposed claims-based methodology would result in an overestimation of eligible Part D 340B claims to be removed in the calculation of a manufacturer's rebate liability. Some commenters noted that some prescribers may only “moonlight”

at covered entities and that the proposed methodology would not consider that such providers have claims that are prescribed on behalf of the covered entity and some claims that are prescribed in association with a non-340B entity, resulting in the misclassification of claims as 340B-eligible. A commenter believed that the range of potentially eligible 340B claims reported in the estimation was substantially greater than prior estimates of the program's size but did not provide confirmatory evidence. Some commenters noted that because of restrictions put in place by drug manufacturers on which pharmacies can replenish 340B drugs, the identification of a claim as 340B-eligible did not mean that the pharmacy had access to replenish the drug at the 340B price and would result in an overstatement of the number of 340B units. A few commenters raised other reasons as to why the proposed methodology would overestimate the number of 340B-eligible units including: (1) it would classify controlled substances as 340B- eligible when they are generally excluded from 340B eligibility due to the complexities related to procurement; (2) prescriptions may not qualify because they do not meet the patient definition; (3) contract pharmacies fill both 340B -eligible and non-340B -eligible claims; and (4) not all services within a covered entity are 340B -eligible. Some commenters expressed concern that the overestimation of 340B-eligible units may have negative consequences for 340Bcovered entities. A few commenters expressed concern that by overestimating the number of 340B -eligible claims, CMS would reduce the manufacturers' inflation rebate liability and hamper the program's intent, as they believed it, which is to control drug costs for Medicare beneficiaries. A few commenters also expressed concern that an overestimation of 340B-eligible claims would misrepresent the impact of the 340B Program and could result in further restrictions on access to 340B drugs for covered entities from manufacturers.

Response: We appreciate the feedback provided by these commenters. We acknowledged in the CY 2026 PFS proposed rule that the proposed Prescriber-Pharmacy Methodology is likely to overestimate the number of 340B -eligible claims. However, at this time there does not exist an available accounting that includes information on whether a claim for a Part D rebatable drug is 340B -eligible and uses a drug purchased at the 340B price to fill the claim or is associated with a corresponding 340B purchase. Because of the lack of a comprehensive source of information related to 340B claim eligibility and 340B discounted drug utilization, we intend to leverage the publicly available data and claims data available to the agency to determine the number of 340B units to remove from a manufacturer's rebate liability calculation. As described earlier, this methodology is grounded in previously published literature and uses publicly available information (for example, the OPAIS database) as well as claims-level data to determine the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program for the last 3 calendar quarters of the applicable period that begins on October 1, 2025 to implement section 1860D-14B(b)(1)(B) of the Act.

In response to the commenters who expressed concern that an overestimation of the 340B-eligible claims would misrepresent the 340B Program's impact and result in further restrictions on the 340B Program, we remind interested parties that we are adopting the Prescriber-Pharmacy Methodology for use in the Part D Drug Inflation Rebate Program only. Nothing in this final rule modifies a manufacturer's statutory obligations under section 340B(a)(1) of the Public Health Service Act.

Comment: Many commenters provided feedback on actions that CMS may take to clarify or improve the accuracy of identifying 340B -eligible claims in the claims-based methodology. A few commenters requested that CMS clarify whether units dispensed to Medicare Advantage (MA) beneficiaries would be counted and that such units should be accounted for. Another commenter recommended that CMS establish a minimum “threshold” for determining an affiliation between a provider or patient and a covered entity (for example, minimum number of claims, share of services at a given MPN). A commenter suggested that CMS consider a “greater of” approach, which would compare multiple methodologies and select the one that produced the highest estimate. A commenter requested that CMS and HRSA require contract pharmacies, “in-house” pharmacies, and covered entity-owned pharmacies to report additional information, such as NPI and Drug Enforcement Administration (DEA) number, to more easily identify pharmacies that are dispensing 340B drugs on behalf of covered entities. A few commenters requested that CMS collaborate with HRSA to revise the 340B patient definition, establishing a more defined nexus between the patient and provider, and to align any such revisions with the Prescriber-Pharmacy Methodology. A commenter suggested that CMS expand the proposed methodology also to include 340B purchase data. A few commenters requested that CMS evaluate the impact of the proposed HRSA 340B Rebate Model Pilot on the proposed claims-based methodology.

Response: We appreciate the commenters' feedback. In response to commenters who requested clarification as to whether MA beneficiaries would be counted, claims for MA beneficiaries are included in the PDE data, and the Prescriber-Pharmacy Methodology will identify potential 340B Part D units for these beneficiaries. However, the methodology does not use MA encounter data to construct the HRSA covered entity MPN-NPI affiliations. The primary reason for this is because the MA encounter data does not have the MPN populated. Regarding the comments related to exploring the nexus of the 340B patient definition and the Prescriber-Pharmacy Methodology and the impact of the HRSA Rebate Model Pilot on the Prescriber-Pharmacy Methodology, these comments are out of scope for this final rule because they address another program and topics beyond the scope of the Medicare Part D Drug Inflation Rebate Program.

We do not intend to adopt the recommended modifications to the claims-based methodology provided by these commenters at this time. We believe that the Prescriber-Pharmacy Methodology we have proposed, including the modifications outlined in this final rule, sufficiently identifies Part D units as 340B-eligible unless and until a different method to remove 340B units is proposed and finalized. Because the covered entity and CMS do not exchange dispensed Part D drug information confirming the 340B status of a Part D rebatable drug, we are unable to precisely identify 340B units at the claim-level based solely on Part D claims submitted to CMS by the covered entity, therefore, we believe that the Prescriber-Pharmacy Methodology as established in this final rule, which incorporates enhancements to address identified limitations such as “in-house” pharmacies and covered entities that do not have MPN's listed in the 340B OPAIS database, as recommended and supported by commenters, represents an appropriate accounting of 340B units to remove in calculation of a manufacturers inflation rebate liability.

Comment: A few commenters inquired whether CMS has tested the

proposed Prescriber-Pharmacy Methodology and whether CMS would make the results of such testing available.

Response: As stated in the CY 2026 PFS proposed rule, based on preliminary analyses of this claims-based methodology, for most Part D rebatable drugs, we expect to remove about 10 percent to 35 percent of the total number of units determined at Sec. 428.203(a) used to calculate the total rebate amount determined at Sec. 428.201(a). We emphasize that this approximation is preliminary and may vary significantly across different Part D rebatable drugs. CMS declines to publish the results of its preliminary analysis and believes interested parties can replicate the analysis following the methodology provided.

Comment: Some commenters noted that the Prescriber-Pharmacy Methodology may underrepresent 340B claims from grantee sites, such as Ryan White (RW) clinics or ADAPs. A few commenters noted that ADAPs are unique among covered entities and that CMS should consider alternatives to identifying 340B-eligible claims from these sites, such as allowing ADAPs to report data directly to CMS, to increase the accuracy of any proposed estimates. A commenter noted that an ADAP client's provider may be associated with a 340B or a non-340B entity and that linking the NPI of the provider to the ADAP is a challenging proposition. Additionally, the commenter noted that not all pharmacies used by ADAPs are registered in the OPAIS database as contract pharmacies. A commenter recommended that CMS convene a technical advisory group better to inform the ADAP 340B claims identification process.

Response: We appreciate the feedback that commenters have identified regarding the uniqueness of RW clinics and ADAPs, as well as their intersections with the 340B Program and the proposed Prescriber- Pharmacy Methodology. We are not adopting the specific recommendations related to the reconciliation of 340B claims from ADAPs that were submitted by commenters, but CMS is making other modifications to the Prescriber-Pharmacy Methodology that we believe will improve our ability to identify 340B claims associated with RW clinics. Specifically, we are adopting the methodology to use data sources such as the CMS Integrated Data Repository to map 340B OPAIS database provided organizational NPIs to corresponding individual NPIs and MPNs to establish a supplemental list of prescriber NPIs that are associated with covered entities. Early analysis of this supplemental NPI approach to the Prescriber-Pharmacy Methodology revealed that the supplemental NPI approach was able to associate a higher proportion of additional providers associated with 340B grantee programs, such as RW clinics, than with other covered entity types, including disproportionate share hospitals and critical access hospitals than the Prescriber-Pharmacy Methodology alone. This greater provider association for covered entity grantees leads to a higher number of Part D claims being determined as potentially 340B-eligible from these covered entity types. Although we acknowledge the concerns that commenters raised regarding identification of 340B-eligible claims from ADAPs, our preliminary analyses mitigate the impact of such concerns, as the percentage of 340B units identified for drugs commonly covered by ADAPs, such as antiretrovirals, is reasonably close to the average percentage of 340B units identified overall. We may consider methodological refinements in the future to further address commenters' feedback on ADAPs.

After consideration of public comments, we are adopting our proposal to implement the requirement in section 1860D-14B(b)(1)(B) of the Act and described in Sec. 428.203(b)(2) to remove 340B units through the Prescriber-Pharmacy Methodology, with modification to incorporate certain commenters' recommendations to reduce the risk of undercounting of the 340B units to be removed from the calculation of rebatable units. Specifically, as adopted, the agency intends to incorporate recommendations to utilize the supplemental NPI approach using data sources such as the CMS Integrated Data Repository to map 340B OPAIS database provided organizational NPIs to corresponding individual NPIs and MPNs, as well as the approach raised by certain commenters, as discussed earlier in this section, identifying additional pharmacies registered as “Shipping Addresses” of covered entities within the OPAIS data as part of the Prescriber-Pharmacy Methodology to determine the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program for the last three calendar quarter of the applicable period that begins on October 1, 2025 that is, January 1, 2026 through September 30, 2026, in order to implement section 1860D-14B(b)(1)(B) of the Act.

CMS considered an alternative methodology to the Prescriber- Pharmacy Methodology (hereinafter, “the Beneficiary-Pharmacy Methodology”) in the CY 2026 PFS proposed rule (90 FR 32641). In contrast to the Prescriber-Pharmacy Methodology, the Beneficiary- Pharmacy Methodology would identify potentially 340B-eligible units (that would be treated as 340B units for purposes of effectuating the exclusion at Sec. 428.203(b)(2)) as units associated with PDE records that are: (1) dispensed by a pharmacy currently under contract with a covered entity, and (2) for beneficiaries who receive care from a covered entity affiliated with that pharmacy. To implement this methodology, CMS would create beneficiary-pharmacy pairs that meet the defined criteria by combining two files: (1) the same monthly file used in the Prescriber-Pharmacy Methodology that links covered entities (identified by MPN or NPI) with pharmacy NPIs for those covered entities, and (2) a monthly file containing beneficiaries associated with PDE records from the applicable year and the MPNs of providers from which those beneficiaries received care. CMS would generate this latter file by identifying beneficiary-month combinations based on the date of dispense on the PDE record, then determining the MPNs (or NPIs) where those beneficiaries received services during those months. The identification of MPNs (or NPIs) where beneficiaries receive care would rely on inpatient, outpatient, and professional claims within both Medicare FFS and Medicare Advantage claims data.

To establish beneficiary-pharmacy pairs, CMS would merge the two files described previously in this final rule by MPN and month, producing month-level combinations that link beneficiaries to contract pharmacies. These combinations would reflect the universe of beneficiaries who receive services at a covered entity and the associated contract pharmacies for those covered entities. To identify associated PDE records, CMS would filter for records with beneficiary ID, service provider ID, and claim date combinations that align with one of the beneficiary-pharmacy-month combinations. For any PDE record that matches these pairings, the units associated with the record would be considered 340B units.

While CMS noted its anticipation that the degree of overlap between the Prescriber-Pharmacy Methodology and the Beneficiary-Pharmacy Methodology would be high, CMS stated that it may consider revisions to the Prescriber-Pharmacy Methodology based on further analyses of the Beneficiary-Pharmacy Methodology--such as defining 340B units using the union of units identified

by both methodologies or refining the Prescriber-Pharmacy Methodology. We solicited comments on the potential benefits and drawbacks of using a Beneficiary-Pharmacy Methodology and on whether a Beneficiary- Pharmacy Methodology could be combined with the Prescriber-Pharmacy Methodology to validate 340B units identified, such as via a union of the two methodologies.

We received public comments on this proposal. The following is a summary of the comments we received and our responses.

Comment: Some commenters provided suggestions to CMS regarding the differences and benefits of the Prescriber-Pharmacy Methodology compared to the Beneficiary-Pharmacy methodology. These commenters believe that the Prescriber-Pharmacy Methodology would provide a more accurate representation of potentially 340B -eligible claims than the Beneficiary-Pharmacy approach. A few commenters noted that they thought the Beneficiary-Pharmacy Methodology would lead to an underrepresentation of 340B units, citing, for example, the additional complexity involved in beneficiary matching and the underrepresentation of medications taken on a recurring basis. A commenter recommended using both of the proposed methodologies to maximize 340B claim identification.

Response: We appreciate commenters' feedback on this alternative methodology. As previously outlined, we intend to move forward with the proposed Prescriber-Pharmacy Methodology to determine the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program for the last 3 calendar quarters of the applicable period that begins on October 1, 2025, to implement section 1860D-14B(b)(1)(B) of the Act. Based on CMS' analysis and feedback provided by commenters, we believe that the Beneficiary-Pharmacy Methodology is likely more operationally complex, less accurate, and does not offer a significant improvement as a replacement for or use in conjunction with the Pharmacy-Prescriber Methodology.

After further consideration and taking into account the comments received from commenters on the proposed Beneficiary-Pharmacy Methodology, we are not adopting the proposed Beneficiary-Pharmacy Methodology for the applicable period that begins on October 1, 2025.

Comment: A commenter encouraged CMS to develop a 340B units identification methodology to incorporate purchase data to match covered entity acquisitions with Part D claims. Such data includes wholesaler name, wholesaler account number, NDC-11, invoice date, quantity, invoice number, ship-to-pharmacy NPI, and 340B ID.

Response: We appreciate the commenter for sharing their ideas. We do not have access to 340B acquisition data that is specific for 340B purchases associated with Medicare Part D claims. Based on our consideration of comments received, we are adopting our claims-based methodology as proposed to implement the exclusion required by section 1860D-14B(b)(1)(B) of the Act. We will also assess submissions made to the 340B repository to evaluate the feasibility and desirability of future rulemaking to provide for use of such a repository to identify 340B units for the exclusion required by section 1860D-14B(b)(1)(B) of the Act. iii. Alternative Policy Considered: Estimation Percentage Using PVP and AMP Data

As described in section III.E.3.c.i of this final rule, CMS considered an alternative estimation methodology to remove units from the total number of units dispensed of a Part D rebatable drug for each applicable period that would be based on a calculated percentage that reflects the portion of 340B purchasing relative to total sales. This alternative estimation methodology was proposed in the CY 2025 PFS proposed rule (89 FR 61969), in which we proposed to use an estimation percentage that would equal the total number of units purchased by covered entities under the 340B Program for an NDC-9, divided by the total units sold of that NDC-9. We include more detail in section III.E.3.c.i of this final rule regarding the estimation percentage methodology originally discussed in the CY 2025 PFS proposed rule.

We acknowledged some limitations of this methodology in the CY 2025 PFS proposed and final rules, as noted in section III.E.3.c.i of this final rule. After further consideration of comments received in response to the CY 2025 PFS proposed rule, we are no longer pursuing this policy at this time but may consider it in future rulemaking. We did not solicit comment on this approach. However, where commenters provided comparison or analysis of this approach as it relates to the proposed Prescriber-Pharmacy Methodology, we have summarized those comments and responded accordingly earlier in this final rule. iv. Establishing a Medicare Part D Claims Data 340B Repository

In the initial Medicare Part D Drug Inflation Rebate Guidance, we solicited comments on the best mechanism to identify 340B units dispensed under Part D.\364\ CMS discussed requiring the dispensing entity to include a 340B claims indicator on the Part D drug claim to be included in PDE records.\365\ Many commenters disagreed that requiring the dispensing entity to include a 340B claims indicator on the Part D drug claim to be included on the PDE record was the most accurate way to identify 340B discounts for Part D drugs. A few commenters highlighted the operational challenges, administrative burden, and potential for increased dispensing fees and reimbursement issues with both point-of-sale claims indicators and retrospective 340B identifiers. In addition, a wide array of interested parties recommended that CMS create a mechanism through which covered entities would retrospectively submit data to CMS identifying 340B claims dispensed under Part D. Interested parties suggested that this mechanism allow covered entities to submit these data directly to CMS, rather than through claims that dispensers submit via Part D plan sponsors.

\364\ See: https://www.cms.gov/files/document/medicare-part-d-inflation-rebate-program-initial-guidance.pdf.

\365\ Currently, a pharmacy may voluntarily use the value of “AA” in the Submission Type Code (D17-K8) field to indicate use of a 340B drug at the time of the adjudication or dispensing of the claim. See: National Council on Prescription Drug Program (NCPDP) 340B Information Exchange Reference Guide Version 2.0, June 2019, https://www.ncpdp.org/NCPDP/media/pdf/340B_Information_Exchange_Reference_Guide.pdf.

In response to this feedback from interested parties, in the CY 2025 PFS proposed rule (89 FR 61971 through 61972) we solicited comments on establishing a repository in a future year of the Medicare Part D Drug Inflation Rebate Program to comply with the requirement under section 1860D-14B(b)(1)(B) of the Act that CMS shall exclude from the total number of units for a Part D rebatable drug those units for which a manufacturer provided a discount under the 340B Program. In the CY 2025 PFS proposed rule (89 FR 61971), we stated that this approach would require that covered entities submit certain data elements from Part D 340B claims to the repository, and we solicited comments on such a requirement. In the CY 2025 PFS final rule (89 FR 98293), we stated that we would explore avenues to implement section 1860D-14B(b)(1)(B) of the Act,

which requires the exclusion from the total number of units for a Part D rebatable drug those units for which a manufacturer provided a discount under the 340B Program starting January 1, 2026, through the establishment of a repository. To inform policy development for this rulemaking, we reviewed and considered the comments received on the CY 2025 PFS proposed rule.

In the CY 2026 PFS proposed rule (90 FR 32641 through 32644), we proposed to establish a repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program in a future applicable period. We proposed to allow covered entities to submit data on units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program beginning in 2026 to begin testing the usability of the 340B repository.

We proposed that the 340B repository would receive, via submission by each covered entity that chooses to submit data to the repository, data elements (as described in the next section) from all of that covered entity's Part D 340B claims with dates of service during the relevant period which the covered entity determined utilized a drug for which the manufacturer provided a discount under the 340B Program (“Part D 340B claims”) for all covered Part D drugs billed to Medicare Part D. As requested by interested parties in comments on the initial Medicare Part D Drug Inflation Rebate Guidance and the CY 2025 PFS proposed rule, the 340B repository would allow covered entities to submit these data directly to CMS (or a contractor), rather than through claims that dispensers submit to Part D plan sponsors. We proposed that CMS would consider all data elements received by the 340B repository to be associated with Part D 340B claims; that is, the 340B repository would not further verify the 340B status of a claim but rather would serve solely to store these data.

Under this process, we proposed that CMS would require a certification from covered entities that the covered entity had submitted all Part D 340B claims with dates of service during the relevant time period and that the data elements from all claims submitted to the 340B repository were from verified 340B claims and, to the best of the covered entity's knowledge, their submission included all Part D 340B claims for the covered entity at the time of submission for the applicable period. We proposed that CMS would require covered entities to certify the completeness and accuracy of the data submitted, and require that the submitter is authorized to submit on behalf of the entity. We stated in the proposed rule that we are exploring approaches to confirming completeness and accuracy of data submissions to the 340B repository. We proposed that CMS would match the stored data elements in the 340B repository to PDE transactions for each Part D rebatable drug dispensed during the applicable period. We proposed that if we determine that the data reported to the repository is usable and reliable and, in the future, propose and finalize a policy to use such data to exclude 340B units from rebate calculations, then units associated with PDE transactions that match to data elements stored in the 340B repository would be considered those for which the manufacturer provided a discount under the 340B Program and therefore would be removed from the total number of units used to calculate the total rebate amount. We stated in the proposed rule that we understand the importance of maintaining the confidentiality of data submitted to the 340B repository. We also stated that we do not expect concerns about the privacy of data submitted to the 340B repository, as this data would not be made available to external parties, including manufacturers and Part D plan sponsors.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Many commenters supported CMS' proposal to establish a 340B repository. A few commenters stated that the repository is a positive step because it would allow CMS to more accurately identify 340B-eligible units than other policies CMS has proposed for this purpose. A few commenters recommended that CMS ensure the repository is a neutral clearinghouse and, if CMS engages with a third-party to operate the repository, that the party is free of conflicts of interest. A few commenters stated that the repository should leverage existing systems where possible, including solutions that are already functional and integrated with manufacturers, covered entities, and pharmacies.

A few commenters stated that they support the repository in conjunction with the use of 340B and non-340B claims indicators. A commenter recommended CMS use existing claims indicators rather than the repository, stating that this would maintain transparency and oversight without creating new burden. A commenter advised CMS to create a timeline for moving from the claims-based methodology to the use of 340B identified claims as soon as possible. A commenter requested that CMS to expedite testing of the repository. A commenter suggested that CMS use data reported to the repository to reconcile rebate amounts for applicable periods beginning in 2025 and 2026.

Response: We appreciate the commenters' suggestion and support of the proposal to establish a repository. We are adopting the proposal to establish a repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program in a future applicable period. We will allow covered entities to submit data on units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program beginning in 2026 to begin testing the usability of the 340B repository. CMS intends to leverage existing processes and systems whenever possible. If CMS engages with a third-party to support the repository, protocols to address conflicts of interest will be followed. For example, CMS will implement safeguards such as firewalls or contractual limitations on usage of information to ensure that any third-party supporting the repository does not misuse information to which it obtains access in its role supporting the repository.

In response to the recommendations for the use of a Part D claims indicator for 340B claims and non-340B claims, we note that such a claims indicator is not currently required and acknowledge feedback received on the CY 2025 PFS final rule that requiring such a claims indicator has the potential to pose operational challenges, increase administrative burden, and may not always be accurate. In this final rule, we maintain that we are not pursuing a 340B claims indicator policy at this time.

Comment: Many commenters supported strict privacy and data security protections for data submitted to the repository. Some commenters stated that data security standards should be clearly set forth in user agreements. Many commenters stated that CMS should ensure data submitted to any Medicare Part D claims data repository is protected from other parties, including manufacturers. A commenter stated that if any claims-specific data is provided to

manufacturers as part of the Medicare Prescription Drug Inflation Rebate Program, this could shift the cost of the 340B Program from manufacturers to beneficiaries and taxpayers because manufacturers could withhold formulary placement rebates. By contrast, many commenters stated that CMS should provide manufacturers with access to data submitted to the repository to verify rebate calculations, with a few commenters stating that sharing data with manufacturers would align with the Trump Administration's transparency goals. A commenter requested more information about a dispute resolution process if inaccurate data is found in the repository that leads to a manufacturer paying an inappropriate rebate.

Response: We appreciate the commenters' feedback. As we stated in the CY 2026 PFS proposed rule (90 FR 32642), we understand the importance of maintaining the confidentiality of data submitted to the 340B repository. Therefore, this data will be for official use only and shall not be disseminated, distributed, or copied to persons not authorized to receive the information, including manufacturers and Part D plan sponsors. We affirm our commitment to protect sensitive and confidential data submitted by covered entities and continue to acknowledge the importance of data security. The repository will be designed to comply with all applicable Federal security laws, regulations, and Department of Health and Human Services (HHS) policies, including but not limited to those related to data protection and information security.

We decline to provide claim-level data to manufacturers regarding the 340B Program or other statutory exclusions of units from inflation rebate calculations as we do not believe this is necessary to operate the program at this time. The data submitted to the 340B repository will not be used to calculate inflation rebates unless and until we propose and finalize a policy to use such data to exclude 340B units from rebate calculations. Therefore, provision of data from the repository to manufacturers would not be useful for the purposes of assessing their rebate reports. In addition, section 1860D-14B(f) of the Act, codified at Sec. 428.403(a)(1), precludes administrative or judicial review of the determination of units as set forth at Sec. 428.203, the determination of whether a drug is a Part D rebatable drug as set forth at Sec. 428.101, and the calculation of the rebate amount as set forth at Sec. 428.201(a) inclusive of any reconciled rebate amount. As explained in the CY 2025 final rule (FR 98307), the Suggestion of Error process is limited to mathematical steps involved in determining the rebate amount and the elements precluded from administrative or judicial review will not be considered in-scope for the Suggestion of Error process.

After consideration of public comments, we are adopting the policies as proposed. v. Covered Entities To Submit 340B Claims Data to the 340B Repository

In the CY 2026 PFS Proposed Rule (90 FR 32642), we proposed that covered entities would optionally begin submitting the fields specified by CMS (as described further later in this section) to the 340B repository beginning in 2026 for Part D 340B claims with dates of service on or after January 1, 2026 to allow for CMS to begin usability testing for the 340B repository. CMS would not use the data submitted during the testing period to remove units from Part D inflation rebates unless and until a policy to do so was proposed and finalized. We proposed that we expected that hospitals receiving Medicare Disproportionate Share Hospital (DSH) payments, Federally Qualified Health Centers (FQHCs), and Critical Access Hospitals (CAHs) would begin to submit data elements to the 340B repository during the testing period. CMS strongly encouraged all covered entities to submit data elements to the 340B repository during the testing period beginning in 2026, as this participation would allow for robust testing of data quality and completeness. It would also provide an opportunity for covered entities to develop and test their data submission processes. CMS proposed that it would address the possibility of mandatory reporting of data elements to the 340B repository by covered entities in future years in future rulemaking. CMS noted that many covered entities are providers and suppliers regulated by CMS under Title XVIII of the Act, including hospitals receiving DSH payments, CAHs and FQHCs. CMS noted that it was actively considering options for mandatory reporting to the 340B repository in the near future and recommended that covered entities take advantage of the testing period to prepare for future policy development related to 340B repository reporting.

We noted that we understand covered entities typically contract with vendors, such as 340B third-party administrators (TPAs), to determine 340B-eligibility of claims using data submitted by covered entities and their contractors. We proposed to allow covered entities that choose to submit data to arrange for their TPAs or other vendors to submit certain data elements to the 340B repository on their behalf. We proposed that covered entities would ultimately be responsible for the accuracy of the data submitted to the 340B repository, even if a covered entity has an arrangement with a vendor to submit on its behalf.

We proposed to require entities (whether a covered entity, or a vendor on their behalf) that choose to submit data to the 340B repository during the testing period beginning in 2026 to provide information identifying the covered entity, which could include information such as the covered entity's 340B ID and name as designated in the 340B OPAIS database, when submitting claim information to the 340B repository. We proposed to use the collected identifying information to: (1) perform analyses to assess suitability of the data for future use in removing 340B units; and (2) provide a means to follow up with the covered entity on questions related to claims data submission. In addition to this identifying information, we proposed to require covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 to submit the following data elements from Part D claims for covered Part D drugs that are purchased under the 340B Program and dispensed to Medicare Part D beneficiaries: (1) Date of Service (that is, the date the prescription was filled by the pharmacy); (2) Prescription or Service Reference Number; (3) Fill Number (that is, the code indicating whether the prescription is an original or a refill; if a refill, the code indicates the refill number); (4) Dispensing Pharmacy NPI; and (5) NDC- 11. We proposed to use these data elements to match claims to PDE transactions and perform further analyses to assess suitability of the data for future use in removing 340B units from Part D inflation rebate calculations.

In the CY 2025 PFS proposed rule (89 FR 61971), we solicited comments from interested parties on the first four data elements in the list referenced in the previous paragraph ((1) Date of Service; (2) Prescription or Service Reference Number; (3) Fill Number; and (4) Dispensing Pharmacy NPI) and whether these data elements would be accessible to covered entities to submit to CMS. In comments on the CY 2025 PFS proposed rule and summarized in the CY 2025 PFS final rule (89 FR 98293), many interested parties recommended that CMS collect additional data elements, such as the NDC, stating that the NDC would help CMS better match

the data submitted by the covered entity to the PDE data for Part D rebatable drugs dispensed during an applicable period. We believe that collecting the NDC would provide useful information for analysis of the data submitted, in addition to the four data elements on which we solicited comment in the CY 2025 PFS proposed rule, and which are the minimum elements that would be necessary to match a submission to a PDE transaction to exclude units from inflation rebate calculations, were the repository to be used for such purpose in the future. The NDC is also a required data element collected under an existing State-based program that operates to match and identify 340B units, similar to the 340B repository that we proposed to establish.\366\ Therefore, we believe that requiring covered entities participating in the 340B repository during the testing period beginning in 2026 to submit the NDC in addition to the four data elements listed previously ((1) Date of Service, (2) Prescription or Service Reference Number; (3) Fill Number; and (4) Dispensing Pharmacy NPI) is reasonable and would not create substantial additional burden.

\366\ The State of Oregon allows 340B covered entities to avoid duplicate 340B discounts and Medicaid rebates when contracting with one or more retail pharmacies to dispense drugs purchased at the 340B price by using a retroactive 340B claims submission process. The NDC-11 is one required data element in Oregon's retroactive 340B claims submission process. See: https://www.oregon.gov/oha/HSD/OHP/Tools/340B%20Claims%20File%20Instructions%20and%20Design.docx.

We are issuing an Information Collection Request alongside this final rule entitled “Information Collection Request (ICR) for the Medicare Prescription Drug Inflation Rebate Program under Section 11101 and 11102 of the Inflation Reduction Act (IRA)” (CMS-10930, OMB 0938- 1485) for submission to the 340B repository (by covered entities that choose to submit) of certain data elements from all Part D 340B claims for all covered Part D drugs billed to Medicare Part D with dates of service during the relevant period. Section VI: The Collection of Information Requirements section of this final rule addresses the burden associated with the collection of data for the 340B repository. The ICR includes more details regarding how covered entities can submit data to the 340B repository, including the format for data submission.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Some commenters supported CMS establishing the proposed voluntary 340B repository in calendar year 2026. A commenter emphasized that covered entities are facing new requirements and challenges and stated that the proposed testing period is critical to assess CMS' and providers' investment of time and resources into reporting to the repository.

By contrast, many other commenters requested that CMS make reporting to the repository mandatory for covered entities and their contractors. A few of these commenters stated that without a mandatory requirement for submission to a repository, the repository will not be able to be used to fulfill the legal requirement to remove 340B units. Some commenters stated that a mandatory repository would provide a more comprehensive and accurate method for identifying and excluding 340B units than a voluntary repository. A commenter recommended that if CMS does not implement a requirement to submit to the repository initially, it should make submission mandatory for key types of large hospitals such as DSH and Rural Referral Centers (RRCs), stating that these hospitals have sophisticated software to manage their 340B programs which could streamline submission to the repository. A few commenters requested that CMS clarify that the repository will be mandatory in 2027, which they state could encourage covered entities to use the repository when it is voluntary in 2026. A few commenters stated that under the inflation rebate invoicing timeline, CMS could establish and test a repository and require covered entities to retrospectively report 340B claim data for 2026 to the repository once it is operational.

Some commenters expressed concern that with voluntary reporting, the repository is unlikely to receive submissions from a significant number of covered entities. A commenter stated that time, system set up, and an attestation requirement reduce incentives for covered entities to submit data to a voluntary repository. Another commenter stated that covered entities have consistently opposed efforts to increase transparency in the 340B Program through broader access to claims data. A few commenters stated that low submission rates could impede CMS' ability to acquire the necessary data to test the repository. Another commenter stated that hospitals have had poor compliance rates with CMS-mandated price transparency reporting and, therefore, the commenter has little confidence that voluntary reporting to the repository would meet the statutory requirement to exclude 340B units. A few commenters recommended that CMS engage with interested parties and provide data protections before moving to a mandatory repository. A few commenters stated that CMS should provide a timeline by which the 340B data collection will transition from voluntary to a mandatory requirement.

A few commenters requested CMS work with HRSA to establish an enforcement mechanism tied to mandatory compliance with the repository. A few commenters recommended that CMS consider making data submission to the repository mandatory by relying on its authority at section 1121 of the Act to establish “a uniform system for the reporting,” of “discharge and bill data” by facilities and organizations, in addition to general CMS authorities related to organizations enrolled in Medicare. A few commenters recommended CMS make data submission to the repository mandatory by relying on IRA rulemaking authority and general rulemaking authority under sections 1102(a) and 1871(a)(1) of the Act to establish requirements for Medicare providers through Conditions of Participation. These commenters emphasized that covered entities that do not submit data to the repository could be considered to be in violation of the Conditions of Participation and could be subject to a range of actions up to and including termination of their provider agreements.

Response: We appreciate the commenters for their input and recommendations. We are adopting the proposal to establish a repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program in a future applicable period. We decline to provide a timeline under which we would move to a mandatory repository, but as we stated in the proposed rule, we are actively considering options for mandatory reporting to the 340B repository in the near future and we recommend that covered entities take advantage of the testing period to prepare for future policy development related to 340B repository reporting. We expect that hospitals receiving Medicare DSH payments, FQHCs, and CAHs will begin to submit data elements to the 340B repository during the testing period. We encourage all covered entities to submit data elements to the 340B repository during the testing period beginning in 2026, as this participation would allow for robust

testing of data quality and completeness.

To the commenters that stated that without a mandatory requirement, the repository will not be able to fulfill the legal requirement to remove 340B units from inflation rebate calculations, we note that the repository will not be used at this time to fulfill the legal requirement to remove 340B units, but rather to allow for robust testing of data quality and completeness to allow CMS to assess whether such data could be used to identify and remove 340B units for purposes of calculating Part D inflation rebates in a future applicable period following proposal and finalization of a policy to do so. It will also provide an opportunity for covered entities to develop and test their data submission processes. We appreciate the recommendation to engage with interested parties and provide data protections before moving to a mandatory repository, and we plan to continue to engage with interested parties and ensure that data is protected as we consider options for mandatory reporting to the 340B repository.

Finally, we also appreciate the comments and input related to authorities that the agency may rely on to implement a mandatory reporting requirement to the repository and conduct enforcement related to reporting to the repository. We will consider them in connection with any future rulemaking we may undertake for adoption of a mandatory reporting requirement.

Comment: Many commenters stated that data collected in the repository should be used only for inflation rebate purposes. A few commenters stated that if CMS were to decide to use data submitted to the repository for other programs outside the Medicare Part D Drug Inflation Rebate Program, CMS should provide ample notice, justification, and an opportunity for interested parties to provide feedback. A commenter requested that CMS clarify if the repository will be integrated with the Medicare Transaction Facilitator Data Module under the Medicare Drug Price Negotiation Program. Another commenter stated that HHS should not impose two separate and overlapping data submission requirements on covered entities under the 340B repository and HRSA's 340B Rebate Model Pilot Program.

By contrast, some commenters stated that the repository should serve as more than just a resource for the Medicare Part D Drug Inflation Rebate Program and could be a centralized source to identify 340B-eligible claims across HHS programs. A few of these commenters stated that CMS should work with HRSA to establish a repository with expanded scope that would support transparency across the 340B Program. A few commenters recommended the repository be populated with claim- level data from the HRSA 340B Rebate Model Pilot Program for participating drugs. A commenter stated that data submitted to the repository should be used to monitor misuse of the 340B Program by comparing data submitted to the 340B repository to data submitted under HRSA's 340B Rebate Model Pilot Program. Some commenters stated that the information submitted to the repository could be used in the administration of other programs, such as the Medicare Drug Price Negotiation Program.

A commenter expressed interest in how the data submitted to the repository may be used, suggesting that the data the repository would collect could offer significant value if used for public health trends and drug price modeling. This commenter stated they would be supportive of the repository if the goal of the repository was to better track revenue and provide more transparency and accountability to resolve disputes in addition to validating 340B product data.

Response: We appreciate the commenters for their input and recommendations. At this time, any data submitted to the repository will only be used to begin usability testing to assess usability for the purpose of removing 340B units under the Medicare Part D Drug Inflation Rebate Program. If we were to decide to use data submitted to the repository for other programs outside the Medicare Part D Drug Inflation Rebate Program, we would provide notice, justification, and an opportunity for interested parties to provide suggestions on the proposal.

Comment: Many commenters supported the claims data elements that CMS proposed for submission to the 340B repository. Many commenters stated that the five data elements that CMS proposed are appropriate for submission to the repository and do not present overly burdensome requirements or put protected health information at risk. A few commenters stated that the proposed data elements represent the necessary information to accurately match to PDE records and that the proposed elements could be easily matched to data from Medicare Part D data to identify 340B units to remove. A few commenters recommended CMS minimize the number of data elements for covered entities to submit to the repository. A commenter recommended CMS define data elements and submission timelines for submission to the repository.

Some commenters recommended CMS align the data elements to submit to the repository with the data elements from HRSA's 340B Rebate Model Pilot Program to increase efficiency. A commenter stated that CMS should collect 340B data for all segments of the market rather than only Part D claims, stating that these changes would streamline the submission process for covered entities.

A commenter recommended that CMS collect several additional data fields, such as the Date Prescribed, RX Number, Prescriber ID, Service Provider ID, and BIN/PCN. A commenter recommended CMS finalize the data elements proposed with the addition of the “Quantity Dispensed” element. This commenter stated that covered entities tend to submit inaccurate, incomplete, or variable data in the Quantity Dispensed field. A commenter stated that the proposed “Fill Number” data element is not an element routinely collected or used by ADAPs and should not be a required field for submission to the repository by ADAPs. A commenter recommended CMS add the original purchase date of the units dispensed as an additional data element. A commenter, in apparent conflation of the Prescriber-Pharmacy Methodology and the repository, stated that CMS should avoid relying on NPI for prescribers or contract pharmacy identifiers to identify 340B claims, stating that this would likely cause confusion and misidentification. A commenter recommended CMS include prescriber identification as a required data element for submissions to the repository. A few commenters recommended that CMS work with interested parties to identify data elements that minimize burden on ADAPs as much as possible.

Response: We appreciate the commenters' feedback and recommendations related to the data elements proposed for submission to the repository. We intend to minimize burden on covered entities while collecting the minimum elements that would be necessary to match a submission to a PDE transaction to exclude 340B units from inflation rebate calculations, were the repository to be used for such purpose in the future. We appreciate the commenters who submitted recommended additional data elements to collect and the commenters who supported the proposed data elements.

In the interest of minimizing burden on covered entities while collecting

sufficient information to match a submission to a PDE transaction to exclude units from inflation rebate calculations, we are adopting the requirement that entities (whether a covered entity, or a vendor on their behalf) that choose to submit data to the 340B repository during the testing period provide information identifying the covered entity, which could include information such as the covered entity's 340B ID and name as designated in the 340B OPAIS database, when submitting claim information to the 340B repository. In addition to this identifying information, we are adopting the requirement that covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 must submit the following data elements from Part D claims for covered Part D drugs that are purchased under the 340B Program and dispensed to Medicare Part D beneficiaries: (1) Date of Service; (2) Prescription or Service Reference Number; (3) Fill Number; (4) Dispensing Pharmacy NPI; and (5) NDC-11. We will use these data elements to match claims to PDE transactions and perform further analyses to assess suitability of the data for future use in removing 340B units from Part D inflation rebate calculations. In response to the comments regarding ADAP programs and the Fill Number data element, we believe the data elements we are adopting to collect in the 340B repository minimize burden on covered entities while providing the information needed to match submitted data elements to PDE transactions. For Part D claims, the Fill Number data element is required information to accurately associate the submitted data elements to the correct corresponding PDE record.

Comment: A few commenters stated that submitting data to the repository would not be overly burdensome since entities are already developing infrastructure and operational workflows needed to prepare to submit similar data for a set of drugs that will be included in the HRSA 340B Rebate Model Pilot Program. A commenter supported the proposal to allow third party administrators to transmit that data to the repository on behalf of covered entities.

Some commenters advised CMS to minimize burden on covered entities reporting to the repository. A few commenters stated that the process of identifying claims should not shift costs or burden onto pharmacies or prescribers. A commenter requested CMS finalize the proposal to receive data directly from the covered entity, and not through any payer or manufacturer. A commenter requested that CMS clarify that pharmacies are not required to provide information to the repository, and that only covered entities are voluntarily providing this information.

A commenter interpreted CMS' proposal as requiring covered entities to begin submitting data fields to the 340B repository in 2026 and stated that this requirement would have significant implications for the Indian Health Service (IHS) as IHS facilities operate with limited staff and resources, and the commenter stated that this data collection could be used to restrict 340B savings. A commenter raised concerns regarding administrative costs and cash-flow volatility for small participants if there are new rebate obligations. A commenter recommended that CMS withdraw the requirement to submit to the repository as it would create an overwhelming administrative burden for rural facilities and stated that CMS should work with payers and pharmacies that already have this data. A commenter raised concern about burden for hospital neurology departments and outpatient practices, stating that the availability of the data elements is variable. This commenter recommended that CMS track additional administrative burden associated with submitting data to the repository and devise a strategy to minimize burden without reducing the value of the repository.

A few commenters recommended that, to reduce burden on covered entities, CMS remove the proposed requirement that covered entities certify that the data elements submitted to the 340B repository are from verified Part D 340B claims and, to the best of the covered entity's knowledge, their submission includes all Part D 340B claims for the covered entity at the time of submission for the applicable period. By contrast, a commenter recommended CMS finalize the proposed provision to require covered entities to complete this certification.

A commenter stated that they do not support the repository because imposing duplicative submission requirements puts the stability of the 340B Program at risk. A few commenters stated that submitting data to the repository will substantially increase burden on providers and that providers would need to devote significant resources to ensure compliance, which could divert resources from direct patient care. For these reasons, a commenter suggested CMS use the claims-based methodology to identify Part D 340B claims and abandon the repository approach, including any future mandatory data repository. A commenter recommended that CMS allow State ADAP programs to submit direct purchase and rebate data to the repository.

Response: We appreciate the commenters' feedback and recommendations. We are adopting the proposal that the 340B repository will be established and will begin accepting voluntary submissions from covered entities of the fields specified by CMS beginning in 2026 for Part D 340B claims with dates of service on or after January 1, 2026 to allow for CMS to begin usability testing for the 340B repository. We will not use the data submitted during the testing period to remove units from Part D inflation rebates unless and until a policy to do so is proposed and finalized.

In developing the data elements for submission and process for voluntary submission to the repository, we considered how to minimize burden on covered entities. We do not intend to receive data from pharmacies, manufacturers, or plans on the covered entity's behalf. As we stated in the proposed rule, we understand covered entities typically contract with vendors, such as 340B third-party administrators, to determine 340B-eligibility of claims using data submitted by covered entities and their contractors. We will allow covered entities that choose to submit data to the repository to arrange for their TPAs or other vendors to submit certain data elements to the 340B repository on their behalf if they would like to do so. At this time, we are not collecting direct purchase or rebate data in the 340B repository but we note that if ADAPs are covered entities and provide coverage for a Part D 340B claim, they can submit the data elements from that claim to the 340B repository.

We appreciate the commenters who submitted comments on the proposed requirement that covered entities certify that the data elements from all claims submitted to the 340B repository are from verified 340B claims and, to the best of the covered entity's knowledge, their submission includes all Part D 340B claims for the covered entity at the time of submission for the applicable period. We do not have access to data to validate and ensure accuracy of submitted data, therefore we find this certification necessary to ensure completeness and accuracy of data submissions to the 340B repository. We are adopting the requirement that covered entities must certify the completeness and accuracy of the data submitted.

We disagree that the 340B repository puts the stability of the 340B Program at risk. A wide array of interested parties

commented on the CY 2025 PFS proposed rule and previous CMS policymaking documents recommending that CMS create a mechanism through which covered entities would retrospectively submit data to CMS identifying 340B claims dispensed under Part D. Interested parties advised that this mechanism allow covered entities to submit these data directly to CMS, rather than through claims that dispensers submit via Part D plan sponsors, and we believe this structure will not create risk for the 340B Program.

Comment: A few commenters advised CMS to engage with interested parties related to establishing the repository. A commenter encouraged CMS to collaborate with interested parties to ensure that the repository is established effectively and securely so that covered entities can meaningfully participate. A commenter recommended CMS provide a deadline of when the repository will be live and report on its testing of the repository's data matching regularly. A commenter stated that, if voluntary reporting to the repository is lower than CMS expected, CMS should engage with interested parties to understand why and improve voluntary participation.

A commenter requested that CMS consult with HRSA and provide educational resources and training related to submitting data to the repository that would lower administrative burdens on pharmacists. A commenter requested that CMS convene an advisory group to assist in finalizing and implementing policy related to ADAPs submitting data to the repository and suggested interested parties to serve as representatives for the group.

Response: We appreciate the commenters' feedback and recommendations. We welcome engagement with interested parties, including on topics such as data submission requirements and timing, as we work to operationalize the repository. We will share more information about the repository operationalization as soon as possible and will work to engage with interested parties, including those representing ADAPs, to understand any barriers to participation. We will also consider how to provide useful training and resources related to submitting data to the repository that would lower the administrative burdens.

After consideration of public comments, we are adopting the policies as proposed for covered entities to submit Part D 340B claims data to a 340B repository. vi. Timing Requirements for Covered Entity Submissions to a Medicare Part D Claims Data 340B Repository

In the CY 2026 PFS Proposed Rule (90 FR 32643), CMS noted that it expected the Medicare Part D claims data 340B repository to launch in Fall 2026, meaning it would be available to collect 340B data from covered entities for claims with dates of service on or after January 1, 2026. This remains CMS's expectation. To foster robust data reporting by covered entities, CMS understands that covered entities will need time to develop a process for collecting the 340B data elements described previously in this final rule and preparing the data in the form and manner prescribed by CMS. Additionally, given the variety in the scope of provider types and organizations that participate in the 340B Program, CMS recognizes the amount of preparation time varies. In consideration of these factors and the anticipated launch date for the 340B repository in Fall 2026, we proposed to require covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 to submit the fields specified by CMS to the 340B repository by a date announced in the future, which would be no sooner than 3 months after the date on which the 340B repository is available to receive submissions from covered entities. Covered entities that choose to submit data should submit data elements related to Part D 340B claims with dates of service on or after January 1, 2026. At a point in the future, CMS will provide a deadline that CMS believes will allow sufficient time for covered entities to gather, validate, and submit the specified data to the 340B repository. CMS will provide the submission deadline(s) once the Medicare Prescription Drug Inflation Rebate ICR is finalized. During the rest of the testing period, CMS anticipates that covered entities will be expected to report data on a quarterly basis within 3 months of the end of a given calendar quarter. For example, for claims with dates of service between October 1, 2026, through December 31, 2026, covered entities that choose to submit data elements from Part D 340B claims would submit the data to the 340B repository no later than March 31, 2027. We proposed that the data from these submissions would be used to assess the usability of such data to implement section 1860D-14B(b)(1)(B) of the Act, which requires the exclusion from the total number of units for a Part D rebatable drug those units for which a manufacturer provided a discount under the 340B Program starting January 1, 2026.

We proposed to provide covered entities that choose to submit data to the 340B repository with additional time to submit data to reflect a revision to the 340B determination of claims with dates of service throughout an applicable period. A revision could come in one of two forms: (1) resubmission of data for a claim that the covered entity previously submitted to the 340B repository in error or with errors in the requested data fields, or (2) new submission of data for a claim for a drug that the covered entity had previously determined was not purchased under the 340B Program, but later identified was purchased under such program. In instances where the covered entity submits Part D 340B claims data to the repository that is either (1) incomplete or (2) contains invalid data, we may inform the covered entity of such error and request that the covered entity resolve and resubmit the Part D 340B claims data in order to process the submission successfully. We proposed to provide details on the process and timing for covered entities to submit revised data to the 340B repository after the end of the reporting period in the future.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Many commenters stated that the 340B repository proposal is operationally manageable. Many commenters appreciated the proposed quarterly timeframes and opportunities for data correction and resubmission. A few commenters recommended CMS allow flexibility for multiple data capture pathways, especially for contract pharmacy networks and rural providers. These commenters recommended CMS provide clear guidance, ample testing time, and financial support for system upgrades. A few commenters stated that some covered entities may need more time than others to set up systems to report data and recommended CMS provide flexibility on the initial implementation timeline for covered entities to develop operations to submit complete data.

Response: We appreciate the commenters for their input and recommendations. We understand that to foster robust data reporting, covered entities will need time to develop a process for collecting the 340B data elements described previously in this final rule and preparing the data in the form and manner prescribed by CMS. Additionally, given the variety in the scope of provider types and

organizations that participate in the 340B Program, we recognize that the amount of preparation time will vary. In consideration of these factors and the anticipated launch date for the 340B repository in Fall 2026, we will require covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 to submit the fields specified by CMS to the 340B repository by a date announced in the future, which would be no sooner than 3 months after the date on which the 340B repository is available to receive submissions from covered entities. We also note that we are designing the 340B data collection to be minimally burdensome so that it does not create financial hardship for covered entities. In light of this, we will not provide financial support for system upgrades.

Comment: A commenter questioned how CMS will validate 340B units reported to the repository. A commenter recommended that HRSA expand the 340B Rebate Model Pilot Program to all eligible 340B products and stated that if CMS required participation in the 340B repository, these two programs together would allow for data submitted to HRSA and CMS to be validated across two systems. A commenter recommended that CMS conduct audits of data in the repository, establish ongoing data validation processes, and clarify claims data submission requirements to ensure accuracy and consistency of submitted data.

A few commenters recommended CMS provide covered entities with an opportunity to submit data for 340B claims that were not initially identified or submit corrections to previously submitted data. A commenter recommended that CMS publish annual summaries of corrections made. A commenter recommended that CMS provide a revision period of 30 months to submit revised repository data, stating that the process to certify completeness and accuracy of data creates legal burden. A commenter stated that determining 340B-eligibility can take considerable time and therefore, there may be delays in reporting data to the repository so CMS should consider multiple reconciliation protocols to update rebate reporting.

Response: We appreciate the commenters' feedback and recommendations. As we stated in the CY 2026 PFS proposed rule, we will consider all data elements received by the 340B repository to be associated with Part D 340B claims; that is, the 340B repository will not further verify the 340B status of a claim but rather would serve solely to store these data. We will continue to consider potential data validation processes in the future to help ensure accuracy and completeness of submissions, that is, to help ensure that the data elements received by the 340B repository are associated with Part D 340B claims.

As previously described, we are providing covered entities that choose to submit data to the 340B repository with additional time to submit data to reflect a revision to the 340B determination of claims with dates of service throughout an applicable period. A revision could come in one of two forms: (1) resubmission of data for a claim that the covered entity previously submitted to the 340B repository in error or with errors in the requested data fields, or (2) new submission of data for a claim for a drug that the covered entity had previously determined was not purchased under the 340B Program, but later identified was purchased under such program. In instances where the covered entity submits Part D 340B claims data to the repository that is either (1) incomplete or (2) contains invalid data, we may inform the covered entity of such error and request that the covered entity resolve and resubmit the Part D 340B claims data in order to process the submission successfully. We will provide details on the process and timing for covered entities to submit revised data to the 340B repository after the end of the reporting period in the future.

To the commenter who recommended that HRSA expand the 340B Rebate Model Pilot Program to all eligible 340B products, these comments are out of scope for this final rule because they address another program and topics beyond the scope of the Medicare Part D Drug Inflation Rebate Program.

Comment: A commenter recommended that CMS reconsider the repository (and 340B Rebate Model Pilot Program from HRSA) and instead allow drug manufacturers to operate 340B rebate programs. The commenter explained the potential for efficiency through use of existing technology and evaluation of duplicate discounts across multiple government programs, transparency for all parties to view the same data, and cost savings due to lack of contractors needed to operate the government solutions. Another commenter suggested that CMS explore ways to coordinate data collection and analysis with HRSA to identify 340B-eligible prescriptions.

Response: We appreciate the commenter for their suggestion. At this time, we are adopting our proposal to establish the 340B repository to allow CMS to assess the use of collected data in identifying units of Part D rebatable drugs for which a manufacturer provided a discount under the 340B Program. Comments regarding 340B rebate programs operated by drug manufacturers are out of scope for this final rule because they address other programs and topics beyond the scope of the Medicare Part D Drug Inflation Rebate Program.

After consideration of public comments, we are adopting the policies as proposed. d. Reports of Rebate Amounts, Reconciliation, Suggestion of Error, and Payments (Sec. Sec. 428.400 Through 428.405)

Section 1860D-14B(a)(1) of the Act requires the Secretary to report to each manufacturer of a Part D rebatable drug the following information not later than 9 months after the end of the applicable period: (1) the amount, if any, of the excess AnMP increase described in section 1860D-14B(b)(1)(A)(ii) of the Act for each Part D rebatable drug, and (2) the rebate amount for each Part D rebatable drug. In compliance with section 1860D-14B(a)(2) of the Act, the manufacturer of a Part D rebatable drug must provide a rebate for each Part D rebatable drug no later than 30 calendar days after the receipt of the information provided by the Secretary in section 1860D-14B(a)(1) of the Act.

In accordance with Sec. Sec. 428.404 and 428.405, CMS has established a standard method and process to issue Rebate Reports to manufacturers of Part D rebatable drugs and to accept manufacturer rebate payments. CMS has established an online portal, the “Manufacturer Payment Portal” (MPP), administered by a CMS contractor, through which manufacturers will access their Rebate Reports, submit Suggestions of Error, as applicable, and pay rebate amounts due, as described in Sec. Sec. 428.404 and 428.405. Manufacturers of Part D rebatable drugs should provide points of contact to view the rebate reports described at Sec. Sec. 428.401 and 428.402, enter and modify banking information, and initiate payments of rebate amounts through the MPP.

We did not make any proposals associated with the method and process to issue Rebate Reports to manufacturers of Part D rebatable drugs and to accept manufacturer rebate payments. We did not receive public comments on these policies. i. Rebate Reports and Reconciliation (Sec. 428.401); Deadline and Process for Payment of Rebate Amount (Sec. 428.405)

As stated in the CY 2025 PFS final rule (89 FR 98264), we codified a multi-step process to provide a manufacturer

as set forth in Sec. 428.20 with the rebate information specified in section 1860D-14B(a) of the Act. Specifically, as stated in the CY 2025 PFS final rule (89 FR 98264), we established the information that will be included in a Rebate Report at Sec. 428.401, which includes the NDC(s) identified for the Part D rebatable drug, the total number of units dispensed under Part D for the Part D rebatable drug for the applicable period, and the rebate amount due, among other items specified in Sec. 428.401. Additionally, we established that payment for a rebate amount due must be paid by the 30th day after the date of the receipt of the information containing the rebate amount.

Consistent with the approach specified in section 40 of the revised Medicare Part D Drug Inflation Rebate Guidance, in the CY 2026 PFS proposed rule (90 FR 32644), we proposed adding paragraph (c)(3) at Sec. 428.401 to clarify that CMS will report the manufacturer's rebate amount due as a dollar amount that is rounded to the nearest cent. CMS did not specify an approach to reporting of the rebate amount in the CY 2025 PFS final rule, and we believe it is necessary to provide this information to manufacturers to provide notice of CMS' approach to rounding of the rebate amount. The calculation steps specified in subpart C of part 428 will not include rounded values.

We did not receive public comments on this proposal, and we are finalizing as proposed at Sec. 428.401(c)(3).

Additionally, in the CY 2026 PFS proposed rule (90 FR 32644), we proposed a clarifying edit at Sec. 428.405(a)(1) to specify that the manufacturer must pay the rebate amount due no later than on the 30th calendar day after the date of receipt of the information regarding the rebate amount. The current language specifies that the payment is due “30 calendar days” after the date of receipt of information regarding the rebate amount. CMS does not believe this edit substantively revises the due date.

We did not receive public comments on this proposal, and we are finalizing the revisions as proposed at Sec. 428.405(a)(1).

In the CY 2025 PFS final rule (89 FR 98588), to determine which data elements would be included when CMS reports the rebate amount to the manufacturer, we stated that we considered the statutory requirements outlined in section 1860D-14B(a)(1)(A) through (B) of the Act to determine what information is necessary for manufacturers to review the accuracy of the rebate amount while also protecting proprietary information. As stated in the CY 2025 PFS final rule (89 FR 98588), CMS structured a two-step reporting process to first include a Preliminary Rebate Report to provide an initial notice to manufacturers regarding whether they may owe a rebate amount, followed by the Rebate Report. Further, we proposed and finalized additional data elements within the Preliminary Rebate Reports and the Rebate Reports not listed in statute based on input from public comments (for example, the payment amount benchmark period, the applicable period CPI-U). CMS did not finalize additional elements suggested, such as data at the PDE record level, after weighing whether any such additional information fulfilled CMS' statutory obligation and the potential benefits to manufacturers against the administrative burdens additional reporting would impose on the agency and operational feasibility. The elements that are set forth at Sec. Sec. 428.401(b)(1) and (c)(1) satisfy these considerations.

In this final rule, CMS clarifies that certain data elements provided to manufacturers in Preliminary Rebate Reports, Rebate Reports, and reconciled reports of a rebate amount (which may each include the same elements, revised as applicable due to updates in the data), are provided to manufacturers of a Part D rebatable drug in alignment with section 1927(b)(3)(D) of the Act. This section of the Act provides an exception to the confidentiality of information disclosed by manufacturers or wholesalers under section 1927(b)(3) of the Act as the Secretary determines to be necessary to carry out certain sections of the Act, including section 1860D-14B of the Act (that is, the Part D Drug Inflation Rebate Program).

Specifically, CMS anticipates that most data included in Preliminary Rebate Reports, Rebate Reports, reconciled Preliminary Rebate Reports, and reconciled Rebate Reports will not implicate section 1927(b)(3)(D) of the Act, as CMS anticipates that in most cases the party that will receive these reports will be the same party that reported the relevant information. However, we acknowledge that some situations may raise a possibility of disclosure by the Secretary of AMP information, or information derived therefrom, to a party besides the party that reported the information originally; such situations could implicate confidentiality under section 1927(b)(3)(D) of the Act. Such situations may include, but are not necessarily limited to, (1) transfer of a rebatable drug from one manufacturer to another manufacturer, such that the manufacturer identified in the Rebate Report differs from the manufacturer that originally reported certain benchmark pricing information, and (2) information about initial drugs associated with line extensions. In instances where the parties may be different, CMS emphasizes that the data included in a report of the rebate amount is based on CMS' independently performed calculations. Though these calculations rely on information disclosed by manufacturers as inputs, the data reported in a Preliminary Rebate Report and a Rebate Report (or a reconciled version of these reports) will not be identical to the information reported by manufacturers (for example, manufacturers report quarterly AMP values, whereas the benchmark period manufacturer price is an aggregate amount using AMP values across multiple quarters when available). Therefore, reporting such data elements to another manufacturer for purposes of the Medicare Part D Drug Inflation Rebate Program would not violate the confidentiality requirements in section 1927 of the Act. Additionally, CMS notes that section 1927(b)(3)(D)(i) of the Act provides an exception from the confidentiality provision in section 1927(b)(3)(D) of the Act based on what the “Secretary determines to be necessary to carry out” under 1860D-14B of the Act (among other listed statutory provisions). CMS is applying this exception to the data elements in the Preliminary Rebate Report for the purpose of carrying out the Medicare Part D Drug Inflation Rebate Program.

Second, in the CY 2025 PFS final rule (89 FR 98266), we stated that the purpose of providing additional data elements not explicitly listed in sections 1860D-14B(a)(1)(A) through (B) of the Act (for example, benchmark period manufacturer price, the annual manufacturer price) is based on CMS' assessment of what data elements are necessary for a manufacturer to review the Preliminary Rebate Report for a Suggestion of Error. Providing these data in the Preliminary Rebate Report (and corresponding reports) ensures that (1) manufacturers will be able to submit a Suggestion of Error, thereby promoting accuracy in the implementation of the rebate program, and (2) manufacturers will have advanced notice of a potential rebate amount due.

We did not make any proposals associated with the data elements provided to manufacturers of Part D rebatable drugs in Preliminary Rebate Reports and Rebate Reports (and reconciled versions of these reports); however, we received public comments on this topic from interested parties. The following is a summary of the

comments we received and our responses.

Comment: A few commenters requested that CMS allow State ADAPs to report to CMS directly the ADAP 340B units for CMS to identify 340B direct purchase and 340B rebated units through the Part D inflation rebate report reconciliation process. The commenters stated that some 340B ADAP rebate-eligible drugs are not included in the data reconciled with a manufacturer until after the manufacturer will receive a Rebate Report from CMS because ADAPs submit data to manufacturers up to 12 months after the end of a calendar quarter and manufacturers then are permitted 3 months for reconciliation and payment of rebates to the ADAPs.

Response: We appreciate the commenters' suggestion. As stated in the CY 2025 PFS final rule (89 FR 98264), we codified a multi-step process to provide a manufacturer (as set forth at Sec. 428.20) with a reconciled rebate amount within 12 months and 36 months after the initial Rebate Report is issued for each applicable period. As set forth at Sec. 428.401(d)(1)(ii), the information in the report for a reconciled rebate amount will include the same data elements as provided in the information provided to the manufacturer of a Part D rebatable drug regarding the preliminary reconciliation of a rebate amount (set forth at Sec. 428.401(d)(1)(i)). This information includes, if applicable, an updated total number of rebatable units, including updates submitted by a PDP or MA-PD plan sponsor and updates to 340B units (as applicable to the dates of service and applicable periods determined at Sec. 428.203(b)(2)(i)(A) and (B)). As discussed in the CY 2025 PFS final rule (89 FR 98264), when considering options for the approach and timing of a reconciliation process, we prioritized, to the extent feasible, completeness and accuracy of the data elements contributing to the calculation of the rebate amount. For the reconciliation process, manufacturers will not be submitting additional information to CMS directly. ii. Rebate Reports for the Applicable Periods Beginning October 1, 2022, and October 1, 2023 (Sec. 428.402)

As stated in the CY 2025 PFS final rule (89 FR 97710), we codified at Sec. 428.402 the options afforded to CMS in section 1860D-14B(a)(3) of the Act to delay sending the information required by section 1860D- 14B(a)(1) of the Act for the applicable periods beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025. Specifically, per Sec. 428.402(c), CMS will issue a Preliminary Rebate Report for each applicable period followed by issuance of the Rebate Report for each applicable period no later than December 31, 2025. Additionally, for the applicable period beginning October 1, 2022, CMS will conduct a single reconciliation 21 months after issuance of the Rebate Report for this applicable period (see Sec. 428.402(c)(1)(ii)). As set forth at Sec. 428.402(c)(2)(ii), for the applicable period beginning October 1, 2023, the rebate amount will be reconciled twice at 9 and 33 months after the Rebate Report is issued for the applicable period. We stated in the CY 2025 PFS proposed rule (89 FR 61983) that this approach aligns claims and payment data run-out with the run-out used during a regular reconciliation cycle. However, CMS finalized the regulatory text specifying the time periods for regular reconciliation cycles at Sec. 428.401(d) with text that provides CMS with operational flexibility as to the exact date the report with the reconciled rebate amount will be provided to each manufacturer of a Part D rebatable drug by including the word “within” prior to the specified date. We proposed to amend Sec. Sec. 428.402(c)(1)(ii) and (c)(2)(ii) to add the word “within” prior to the specified number of months (for example, 21 months for the applicable period beginning October 1, 2022, and 9 and 33 months for the applicable period beginning October 1, 2023) to be consistent with the regulatory text and cadence for regular reconciliation cycles, as well as to provide operational flexibility on the timing of the release of the report with the reconciled rebate amount.

We did not receive public comments on this proposed provision, and we are finalizing as proposed at Sec. 428.402(c)(1)(ii) and (c)(2)(ii).