1. (a) Statutory basis.

   1. (1) Section 1128A(c)(2) of the Act provides that the Secretary may not collect a civil money penalty until the affected party has had notice and opportunity for a hearing.
   2. (2) Section 1857 (g) of the Act provides that, for Part D sponsors found to be out of compliance with the requirements in part 423, specified remedies may be imposed instead of, or in addition to, termination of the Part D sponsor's contract. Section 1857(g)(4) of the Act makes certain provisions of section 1128A of the Act applicable to civil money penalties imposed on Part D sponsors.

   3. (3)

      1. (i) CMS must impose a civil money penalty on a manufacturer that fails to provide applicable discounts for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with the terms of such manufacturer's—

         1. (A) Coverage Gap Discount Program agreement, in accordance with section 1860D-14A(e)(2) of the Act; and
         2. (B) Manufacturer Discount Program agreement, in accordance with section 1860D-14C(e) of the Act.
      2. (ii) The provisions of section 1128A (other than subsections (a) and (b)) of the Act apply to a civil money penalty under paragraph (a)(3)(i) of this section.
2. (b) [Reserved]

[72 FR 68736, Dec. 5, 2007, as amended 77 FR 22171, Apr. 12, 2012; 91 FR 17591, Apr. 6, 2026]