As used in this part, unless otherwise specified—

ACIP-recommended adult vaccine means a covered Part D drug, as defined in this section, that is a vaccine licensed by the U.S. Food and Drug Administration (FDA) under section 351 of the Public Health Service Act for use by adult populations and administered in accordance with recommendations of the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) as adopted by the CDC Director.

Actual cost means the negotiated price for a covered Part D drug when the drug is purchased at a network pharmacy, and the usual and customary price when a beneficiary purchases the drug at an out-of-network pharmacy consistent with § 423.124(a).

Affected enrollee, as used in this subpart, means a Part D enrollee who is currently taking a covered Part D drug that is subject to a negative formulary change that affects the Part D enrollee's access to the drug during the current plan year.

Alternative prescription drug coverage means coverage of Part D drugs, other than standard prescription drug coverage that meets the requirements of § 423.104(e). The term alternative prescription drug coverage must be either—

1. (1) Basic alternative coverage (alternative coverage that is actuarially equivalent to defined standard coverage, as determined through processes and methods established under § 423.265(d)(2)); or
2. (2) Enhanced alternative coverage (alternative coverage that meets the requirements of § 423.104(f)(1)).

Applicable beneficiary means an individual who, on the date of dispensing a covered Part D drug—

1. (1) Is enrolled in a prescription drug plan or an MA-PD plan;
2. (2) Is not enrolled in a qualified retiree prescription drug plan;

3. (3)

   1. (i) For the purposes of the Coverage Gap Discount Program—

      1. (A) Is not entitled to an income-related subsidy under section 1860D-14(a) of the Act;
      2. (B) Has reached or exceeded the initial coverage limit under section 1860D-2(b)(3) of the Act during the year;
      3. (C) Has not incurred costs for covered Part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1860D-2(b)(4)(B) of the Act; and

      4. (D) Has a claim that—

         (1) Is within the coverage gap;

         (2) Straddles the initial coverage period and the coverage gap;

         (3) Straddles the coverage gap and the annual out-of-pocket threshold; or

         (4) Spans the coverage gap from the initial coverage period and exceeds the annual out-of-pocket threshold; and

   2. (ii) For the purposes of the Manufacturer Discount Program, has incurred costs, as determined in accordance with section 1860D-2(b)(4)(C) of the Act, for covered Part D drugs in the year that exceed the annual deductible specified in section 1860D-2(b)(1) of the Act.

      Applicable discount, for purposes of the—

   3. (1) Coverage Gap Discount Program, has the meaning set forth at § 423.2305; and
   4. (2) Manufacturer Discount Program, has the meaning set forth at § 423.2712.

Applicable drug means a Part D drug that is—

1. (1)

   1. (i) Approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA); or
   2. (ii) In the case of a biological product, licensed under section 351 of the Public Health Service Act (other than, with respect to a plan year before 2019, a product licensed under subsection (k) of such section 351).

2. (2)

   1. (i) If the PDP sponsor of the prescription drug plan or the MA organization offering the MA-PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA-PD plan that the applicable beneficiary is enrolled in;
   2. (ii) If the PDP sponsor of the prescription drug plan or the MA organization offering the MA-PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA-PD plan that the applicable beneficiary is enrolled in;
   3. (iii) Is provided to a particular applicable beneficiary through an exception or appeal for that particular applicable beneficiary; or
   4. (iv) For the purposes of the Manufacturer Discount Program, is provided to a particular applicable beneficiary as a transition fill under § 423.120(b)(3) or as an emergency supply as may be required for an applicable beneficiary who is a long-term care resident.
3. (3) Not a compounded drug product (as described in § 423.120(d)) that contains an applicable drug; and
4. (4) For the purposes of the Manufacturer Discount Program, not a selected drug during a price applicability period with respect to such drug.

Applicable number of calendar days means, with respect to claims for reimbursement submitted electronically, 14 days, and otherwise, 30 days.

At-risk beneficiary means a Part D eligible individual—

1. (1) Who is—

   1. (i) Identified using clinical guidelines (as defined in this section);
   2. (ii) Not an exempted beneficiary; and
   3. (iii) Determined to be at-risk for misuse or abuse of such frequently abused drugs by a Part D plan sponsor under its drug management program in accordance with the requirements of § 423.153(f); or
2. (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as an at-risk beneficiary (as defined in the paragraph (1) of this definition) under the prescription drug plan in which the beneficiary was most recently enrolled and such identification had not been terminated upon disenrollment.

Basic prescription drug coverage means coverage of Part D drugs that is either standard prescription drug coverage or basic alternative coverage.

Bioequivalent has the meaning given such term in section 505(j)(8) of the Food, Drug, and Cosmetic Act.

Clinical guidelines, for the purposes of a drug management program under § 423.153(f), are criteria—

1. (1) To identify potential at-risk beneficiaries who may be determined to be at-risk beneficiaries under such programs; and
2. (2) That are developed in accordance with the standards in § 423.153(f)(16) and, beginning with contract year 2020, will be published in guidance annually.

Contracted pharmacy network means licensed pharmacies, including retail, mail-order, and institutional pharmacies under contract with a Part D sponsor to provide covered Part D drugs at negotiated prices to Part D enrollees.

Corresponding drug means, respectively, a generic or authorized generic of a brand name drug, an interchangeable biological product of a reference product, or an unbranded biological product marketed under the same biologics license application (BLA) as a brand name biological product.

Coverage gap means the period in prescription drug coverage that occurs between the initial coverage limit and the out-of-pocket threshold during the years 2006 through 2024. For purposes of applying the initial coverage limit, Part D sponsors must apply their plan specific initial coverage limit under basic alternative, enhanced alternative or actuarially equivalent Part D benefit designs.

Covered insulin product means, for purposes of § 423.120(h), an insulin product, including a product that is a combination of more than one type of insulin or a product that is a combination of both insulin and a non-insulin drug or biological product, that—

1. (1) Is a covered Part D drug covered under a PDP or MA-PD plan—

   1. (i) Is licensed under section 351 of the Public Health Service Act; and
   2. (ii) Is marketed under the license described in paragraph (1)(i) of this definition.
2. (2) Is not a compounded drug product that contains insulin (as described in § 423.120(d)).

Covered insulin product applicable cost-sharing amount means, with respect to a covered insulin product, as defined in this section, covered under a PDP or an MA-PD plan prior to an enrollee reaching the annual out-of-pocket threshold during plan year 2026 and each subsequent plan year, the lesser of the following:

1. (1) $35.
2. (2) An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of title XI of the Act.

3. (3) An amount equal to 25 percent of the negotiated price (as defined in this section) of the covered insulin product under the PDP or MA-PD plan.

   Covered Part D drug means a Part D drug that is included in a Part D plan's formulary, or treated as being included in a Part D plan's formulary as a result of a coverage determination or appeal under §§ 423.566, 423.580, and 423.600, 423.610, 423,620, and 423.630, and obtained at a network pharmacy or an out-of-network pharmacy in accordance with § 423.124.

Daily cost-sharing rate means, as applicable, the established—

1. (1) Monthly copayment under the enrollee's Part D plan, divided by the number of days in the approved month's supply for the drug dispensed and rounded to the nearest cent; or
2. (2) Coinsurance percentage under the enrollee's Part D plan.

Date of dispensing means the date of service. For long-term care and home infusion pharmacies, the date of dispensing can be interpreted as the date the pharmacy submits the discounted claim for reimbursement.

Dispensing fees means costs that-

1. (1) Are incurred at the point of sale and pay for costs in excess of the ingredient cost of a covered Part D drug each time a covered Part D drug is dispensed;
2. (2) Include only pharmacy costs associated with ensuring that possession of the appropriate covered Part D drug is transferred to a Part D enrollee. Pharmacy costs include, but are not limited to, any reasonable costs associated with a pharmacist's time in checking the computer for information about an individual's coverage, performing quality assurance activities consistent with § 423.153(c)(2), measurement or mixing of the covered Part D drug, filling the container, physically providing the completed prescription to the Part D enrollee, delivery, special packaging, and salaries of pharmacists and other pharmacy workers as well as the costs associated with maintaining the pharmacy facility and acquiring and maintaining technology and equipment necessary to operate the pharmacy. Dispensing fees should take into consideration the number of dispensing events in a billing cycle, the incremental costs associated with the type of dispensing methodology, and with respect to Part D drugs dispensed in LTC facilities, the techniques to minimize the dispensing of unused drugs. Dispensing fees may also take into account costs associated with data collection on unused Part D drugs and restocking fees associated with return for credit and reuse in long-term care pharmacies, when return for credit and reuse is permitted under the State in law and is allowed under the contract between the Part D sponsor and the pharmacy.
3. (3) Do not include administrative costs incurred by the Part D plan in the operation of the Part D benefit, including systems costs for interfacing with pharmacies.

Effective date of the ACIP recommendation means the date specified on the CDC website noting the date the CDC Director adopted the ACIP recommendation.

Exempted beneficiary means with respect to a drug management program, an enrollee who—

1. (1) Has elected to receive hospice care or is receiving palliative or end-of-life care;
2. (2) Is a resident of a long-term care facility, of a facility described in section 1905(d) of the Act, or of another facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy;
3. (3) Is being treated for cancer-related pain or
4. (4) Has sickle cell disease.

Frequently abused drug means a controlled substance under the Federal Controlled Substances Act that the Secretary determines is frequently abused or diverted, taking into account all of the following factors:

1. (1) The drug's schedule designation by the Drug Enforcement Administration.
2. (2) Government or professional guidelines that address that a drug is frequently abused or misused.
3. (3) An analysis of Medicare or other drug utilization or scientific data.

Government-funded health program means any program established, maintained, or funded, in whole or in part, by the Government of the United States, by the government of any State or political subdivision of a State, or by any agency or instrumentality of any of the foregoing, which uses public funds, in whole or in part, to provide to, or pay on behalf of, an individual the cost of Part D drugs, including any of the following:

1. (1) An approved State child health plan under title XXI of the Act providing benefits for child health assistance that meets the requirements of section 2103 of the Act;
2. (2) The Medicaid program under title XIX of the Act or a waiver under section 1115 of the Act;
3. (3) The veterans' health care program under Chapter 17 of title 38 of the United States Code;
4. (4) The Indian Health Service program under the Indian Health Care Improvement Act under Chapter 18 of title 25 of the United States Code; and

5. (5) Any other government-funded program whose principal activity is the direct provision of health care to persons.

   Group health plan, for purposes of applying the definition of incurred costs in § 423.100, has the meaning given such term in 29 U.S.C. 1167(1), but specifically excludes a personal health savings vehicle, as used in this subpart.

Immediate negative formulary change means an immediate substitution or market withdrawal that meets the requirements of § 423.120(e)(2)(i) or (ii) respectively.

Incurred costs means costs incurred by a Part D enrollee—

1. (1) For—

   1. (i) Covered Part D drugs that are not paid for under the Part D plan as a result of application of any annual deductible or other cost-sharing rules for covered Part D drugs prior to the Part D enrollee satisfying the out-of-pocket threshold under § 423.104(d)(5)(iii), including any price differential for which the Part D enrollee is responsible under § 423.124(b); or
   2. (ii) Nominal cost-sharing paid by or on behalf of an enrollee, which is associated with drugs that would otherwise be covered Part D drugs, as defined in § 423.100, but are instead paid for, with the exception of said nominal cost-sharing, by a patient assistance program providing assistance outside the Part D benefit, provided that documentation of such nominal cost-sharing has been submitted to the Part D plan consistent with the plan processes and instructions for the submission of such information; and

2. (2) That are paid for—

   1. (i) By the Part D enrollee or on behalf of the Part D enrollee by another person, and the Part D enrollee (or person paying on behalf of the Part D enrollee) is not reimbursed through insurance or otherwise, a group health plan, or other third party payment arrangement, or the person paying on behalf of the Part D enrollee is not paying under insurance or otherwise, a group health plan, or third party payment arrangement;
   2. (ii) Under State Pharmaceutical Assistance Program (as defined in § 423.464); by the Indian Health Service, an Indian tribe or tribal organization, or urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act) or under an AIDS Drug Assistance Program (as defined in part B of title XXVI of the Public Health Service); or by a manufacturer as payment for an applicable discount (as defined in § 423.2305) under the Medicare Coverage Gap Discount Program (as defined in § 423.2305); or
   3. (iii) Under § 423.782.
3. (3) For 2025 and subsequent years, that are reimbursed through insurance, a group health plan, or certain other third party payment arrangements, but not including the coverage provided by a prescription drug plan or an MA-PD plan that is basic prescription drug coverage or any payments by a manufacturer under the Manufacturer Discount Program under subpart AA of this part.

Insurance means a health plan that provides, or pays the cost of Part D drugs, including, but not limited to, any of the following:

1. (1) Health insurance coverage (as defined in 42 U.S.C. 300gg-91(b)(1));
2. (2) A Medicare Advantage plan (as described under section 1851(a)(2) of the Act); and
3. (3) A PACE organization (as defined under sections 1894(a)(3) and 1934(a)(13) of the Act) but specifically excluding a personal health savings vehicle.

I/T/U pharmacy means a pharmacy operated by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization, all of which are defined in section 4 of the Indian Health Care Improvement Act, 25 U.S.C. 1603.

Labeler code means the first segment of the National Drug Code (NDC) that identifies a particular manufacturer.

Long-term care facility means a skilled nursing facility as defined in section 1819(a) of the Act, or a medical institution or nursing facility for which payment is made for an institutionalized individual under section 1902(q)(1)(B) of the Act.

Long-term care pharmacy means a pharmacy owned by or under contract with a long-term care facility to provide prescription drugs to the facility's residents.

Long-term care network pharmacy means a long-term care pharmacy that is a network pharmacy.

Maintenance change means one of the following negative formulary changes with respect to a covered Part D drug:

1. (1) Making any negative formulary changes to a drug within 90 days of adding a corresponding drug to the same or a lower cost-sharing tier and with the same or less restrictive prior authorization (PA), step therapy (ST), or quantity limit (QL) requirements (other than immediate substitutions that meet the requirements of § 423.120(e)(2)(i)).
2. (2) Making any negative formulary changes to a reference product within 90 days of adding a biosimilar biological product other than an interchangeable biological product of that reference product to the same or a lower cost-sharing tier and with the same or less restrictive PA, ST, or QL requirements.
3. (3) Removing a non-Part D drug.
4. (4) Adding or making more restrictive PA, ST, or QL requirements based upon a new FDA-mandated boxed warning.
5. (5) Removing a drug withdrawn from sale by the manufacturer or that FDA determines to be withdrawn for safety or effectiveness reasons if the Part D sponsor chooses not to treat it as an immediate negative formulary change.
6. (6) Removing a drug based on long term shortage and market availability.
7. (7) Making negative formulary changes based upon new clinical guidelines or information or to promote safe utilization.
8. (8) Adding PA to help determine Part B versus Part D coverage.

Manufacturer means any entity which is engaged in the production, preparation, propagation, compounding, conversion or processing of prescription drug products, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. For purposes of the Coverage Gap Discount Program and the Manufacturer Discount Program, such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law, but includes entities otherwise engaged in repackaging or changing the container, wrapper, or labeling of any applicable drug product in furtherance of the distribution of the applicable drug from the original place of manufacture to the person who makes the final delivery or sale to the ultimate consumer or user.

Manufacturer Discount Program means the Medicare Part D Manufacturer Discount Program established under section 1860D-14C of the Act.

Manufacturer Discount Program agreement means the agreement described at section 1860D-14C(b) of the Act.

Medicare Coverage Gap Discount Program (or Coverage Gap Discount Program) means the Medicare Coverage Gap Discount Program established under section 1860D-14A of the Act.

Medicare Coverage Gap Discount Program agreement (or Coverage Gap Discount Program agreement) means the agreement described in section 1860D-14A(b) of the Act.

National Drug Code (NDC) means the unique identifying prescription drug product number that is listed with the Food and Drug Administration (FDA) identifying the product's manufacturer, product and package size and type.

Negative formulary change means one of the following changes with respect to a covered Part D drug:

1. (1) Removing a drug from a formulary.
2. (2) Moving a drug to a higher cost-sharing tier.
3. (3) Adding or making more restrictive prior authorization (PA), step therapy (ST), or quantity limit (QL) requirements. Negative formulary changes do not include safety-based claim edits which are not submitted to CMS as part of the formulary.

Negotiated price means the price for a covered Part D drug that—

1. (1) The Part D sponsor (or other intermediary contracting organization) and the network dispensing pharmacy or other network dispensing provider have negotiated as the lowest possible reimbursement such network entity will receive, in total, for a particular drug;

2. (2) Meets all of the following:

   1. (i) Includes all price concessions (as defined in this section) from network pharmacies or other network providers;
   2. (ii) Includes any dispensing fees; and
   3. (iii) Excludes additional contingent amounts, such as incentive fees, if these amounts increase prices; and
3. (3) Is reduced by non-pharmacy price concessions and other direct or indirect remuneration that the Part D sponsor passes through to Part D enrollees at the point of sale.

Network pharmacy means a licensed pharmacy that is under contract with a Part D sponsor to provide covered Part D drugs at negotiated prices to its Part D plan enrollees.

Non-applicable drug means any Part D drug that is not an applicable drug and not a selected drug during a price applicability period with respect to such drug.

Non-maintenance change means a negative formulary change that is not a maintenance change or an immediate negative formulary change.

Non-preferred pharmacy means a network pharmacy that offers covered Part D drugs at negotiated prices to Part D enrollees at higher cost-sharing levels than apply at a preferred pharmacy.

Or otherwise means through a government-funded health program.

Other specified entities means State Pharmaceutical Assistance Programs (as defined in § 423.454), entities providing other prescription drug coverage (as described in § 423.464(f)(1)), authorized prescribers, network pharmacies, and pharmacists.

Out-of-network pharmacy means a licensed pharmacy that is not under contract with a Part D sponsor to provide negotiated prices to Part D plan enrollees.

Part D drug means—

1. (1) Unless excluded under paragraph (2) of this definition, any of the following if used for a medically accepted indication (as defined in section 1860D-2(e)(4) of the Act)—

   1. (i) A drug that may be dispensed only upon a prescription and that is described in sections 1927(k)(2)(A)(i) through (iii) of the Act.
   2. (ii) A biological product described in sections 1927(k)(2)(B)(i) through (iii) of the Act.
   3. (iii) Insulin described in section 1927(k)(2)(C) of the Act.
   4. (iv) Medical supplies associated with the injection of insulin, including syringes, needles, alcohol swabs, and gauze.
   5. (v) A vaccine licensed under section 351 of the Public Health Service Act and for vaccine administration on or after January 1, 2008, its administration.
   6. (vi) Supplies that are directly associated with delivering insulin into the body, such as an inhalation chamber used to deliver the insulin through inhalation.
   7. (vii) A combination product approved and regulated by the FDA as a drug, vaccine, or biologic described in paragraphs (1)(i), (ii), (iii), or (v) of this definition.

2. (2) Does not include any of the following:

   1. (i) Drugs for which payment as so prescribed and dispensed or administered to an individual is available for that individual under Part A or Part B (even though a deductible may apply, or even though the individual is eligible for coverage under Part A or Part B but has declined to enroll in Part A or Part B).
   2. (ii) Drugs or classes of drugs, or their medical uses, which may be excluded from coverage or otherwise restricted under Medicaid under sections 1927(d)(2) or (d)(3) of the Act, except for smoking cessation agents.
   3. (iii) Medical foods, defined as a food that is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation, and that are not regulated as drugs under section 505 of the Federal Food, Drug, and Cosmetic Act.

Person means a natural person, corporation, mutual company, unincorporated association, partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit corporation, unincorporated organization, government or governmental subdivision or agency.

Personal health savings vehicle means a vehicle through which individuals can set aside their own funds to pay for health care expenses, including covered Part D drugs, on a tax-free basis including any of the following—

1. (1) A Health Savings Account (as defined under section 220 of the Internal Revenue Code);
2. (2) A Flexible Spending Account (as defined in section 106(c)(2) of the Internal Revenue Code) offered in conjunction with a cafeteria plan under section 125 of the Internal Revenue Code; and
3. (3) An Archer Medical Savings Account (as defined under section 223 of the Internal Revenue Code); but specifically excluding a Health Reimbursement Arrangement (as described under Internal Revenue Ruling 2002-41 and Internal Revenue Notice 2002-45)

Plan allowance means the amount Part D plans that offer coverage other than defined standard coverage may use to determine their payment and Part D enrollees' cost-sharing for covered Part D drugs purchased at an out-of-network pharmacy or in a physician's office in accordance with the requirements of § 423.124(b).

Potential at-risk beneficiary means a Part D eligible individual who is not an exempted beneficiary (as defined in this section) and—

1. (1) Who is identified using clinical guidelines (as defined in this section); or
2. (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as a potential at-risk beneficiary (as defined in paragraph (1) of this definition) under the prescription drug plan in which the beneficiary was most recently enrolled and such identification had not been terminated upon disenrollment.

Preclusion list means a CMS compiled list of prescribers who—

1. (1) Meet all of the following requirements:

   1. (i) The prescriber is currently revoked from Medicare for a reason other than that stated in § 424.535(a)(3) of this chapter.
   2. (ii) The prescriber is currently under a reenrollment bar under § 424.535(c) of this chapter.

   3. (iii) CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program. In making this determination under this paragraph (1)(iii), CMS considers the following factors:

      1. (A) The seriousness of the conduct underlying the prescriber's revocation;
      2. (B) The degree to which the prescriber's conduct could affect the integrity of the Part D program; and
      3. (C) Any other evidence that CMS deems relevant to its determination; or

2. (2) Meet both of the following requirements:

   1. (i) The prescriber has engaged in behavior, other than that described in § 424.535(a)(3) of this chapter, for which CMS could have revoked the individual to the extent applicable had he or she been enrolled in Medicare.

   2. (ii) CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. In making this determination under this paragraph, CMS considers all of the following factors:

      1. (A) The seriousness of the conduct involved.
      2. (B) The degree to which the prescriber's conduct could affect the integrity of the Part D program.
      3. (C) Any other evidence that CMS deems relevant to its determination; or

3. (3) The prescriber, regardless of whether he or she is or was enrolled in Medicare, has been convicted of a felony under Federal or State law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program. Factors that CMS considers in making such a determination under this paragraph are as follows:

   1. (i) The severity of the offense.
   2. (ii) When the offense occurred.
   3. (iii) Any other information that CMS deems relevant to its determination.

Preferred drug means a covered Part D drug on a Part D plan's formulary for which beneficiary cost-sharing is lower than for a non-preferred drug in the plan's formulary.

Preferred pharmacy means a network pharmacy that offers covered Part D drugs at negotiated prices to Part D enrollees at lower levels of cost-sharing than apply at a non-preferred pharmacy under its pharmacy network contract with a Part D plan.

Price applicability period has the meaning given such term in section 1191(b)(2) of the Act and any applicable regulations and guidance.

Price concession means any form of discount, direct or indirect subsidy, or rebate received by the Part D sponsor or its intermediary contracting organization from any source that serves to decrease the costs incurred under the Part D plan by the Part D sponsor. Examples of price concessions include but are not limited to: Discounts, chargebacks, rebates, cash discounts, free goods contingent on a purchase agreement, coupons, free or reduced-price services, and goods in kind.

Program size means the estimated population of potential at-risk beneficiaries in drug management programs (described in § 423.153(f)) operated by Part D plan sponsors that the Secretary determines can be effectively managed by such sponsors as part of the process to develop clinical guidelines.

Qualified prescription drug coverage means any standard prescription drug coverage or alternative prescription drug coverage

Required prescription drug coverage means coverage of Part D drugs under an MA-PD plan that consists of either—

1. (1) Basic prescription drug coverage; or
2. (2) Enhanced alternative coverage, provided there is no MA monthly supplemental beneficiary premium (as defined under section 1854(b)(2)(C) of the Act) applied under the plan due to the application of a credit against the premium of a rebate under § 422.266(b) of this chapter.

Retail pharmacy means any licensed pharmacy that is open to dispense prescription drugs to the walk-in general public from which Part D enrollees could purchase a covered Part D drug without being required to receive medical services from a provider or institution affiliated with that pharmacy.

Rural means a five-digit ZIP code in which the population density is less than 1,000 individuals per square mile.

Selected drug has the meaning given such term in section 1192(c) of the Act and any applicable regulations and guidance.

Standard prescription drug coverage means coverage of Part D drugs that meets the requirements of § 423.104(d). The term standard prescription drug coverage must be either—

1. (1) Defined standard coverage (standard prescription drug coverage that provides for cost-sharing as described in § 423.104(d)(2)(i)(A) and (d)(5)(i)); or
2. (2) Actuarially equivalent standard coverage (standard prescription drug coverage that provides for cost-sharing as described in § 423.104(d)(2)(i)(B) or cost-sharing as described in § 423.104(d)(5)(ii), or both).

Suburban means a five-digit ZIP code in which the population density is between 1,000 and 3,000 individuals per square mile.

Supplemental benefits means benefits offered by Part D plans, other than employer group health or waiver plans, that meet the requirements of § 423.104(f)(1)(ii).

Therapeutically equivalent refers to drugs that are rated as therapeutic equivalents under the Food and Drug Administration's most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations.”

Third Party Administrator (TPA) means the CMS contractor responsible for administering the requirements established by CMS to carry out sections 1860D-14A and 1860D-14C of the Act.

Third party payment arrangement means any contractual or similar arrangement under which a person has a legal obligation to pay for covered Part D drugs.

Urban means a five-digit ZIP code in which the population density is greater than 3,000 individuals per square mile.

Usual and customary (U&C) price means the price that an out-of-network pharmacy or a physician's office charges a customer who does not have any form of prescription drug coverage for a covered Part D drug.

Valid prescription means a prescription that complies with all applicable State law requirements constituting a valid prescription.

[70 FR 4525, Jan. 28, 2005, as amended at 73 FR 20506, Apr. 15, 2008; 74 FR 1543, Jan. 12, 2009; 76 FR 21571, Apr. 15, 2011; 77 FR 22169, Apr. 12, 2012; 77 FR 32407, June 1, 2012; 79 FR 29962, May 23, 2014; 80 FR 7963, Feb. 12, 2015; 80 FR 25966, May 6, 2015; 83 FR 16737, Apr. 16, 2018; 84 FR 15840, Apr. 16, 2019; 86 FR 6115, Jan. 19, 2021; 87 FR 27899, May 9, 2022; 89 FR 30832, Apr. 23, 2024; 89 FR 63828, Aug. 6, 2024; 90 FR 15911, Apr. 15, 2025; 91 FR 17584, Apr. 6, 2026]