[Code of Federal Regulations]

[Title 42, Volume 1]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR50.504]



[Page 147-148]

 

                         TITLE 42--PUBLIC HEALTH

 

    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 

                                SERVICES

 

PART 50_POLICIES OF GENERAL APPLICABILITY--Table of Contents

 

               Subpart E_Maximum Allowable Cost for Drugs

 

Sec.  50.504  Allowable cost of drugs.



    (a) The maximum amount which may be expended from program funds for 

the acquisition of any drug shall be the lowest of

    (1) The maximum allowable cost (MAC) of the drug, if any, 

established in accordance with 45 CFR part 19, plus a dispensing fee 

determined by the Secretary in accordance with paragraph (b) of this 

section, to be reasonable;

    (2) The acquisition cost of the drug plus a dispensing fee 

determined by the Secretary, in accordance with paragraph (b) of this 

section, to be reasonable; or

    (3) The provider's usual and customary charge to the public for the 

drug; Provided, That the MAC established for any drug shall not apply to 

a brand of that drug prescribed for a patient which the prescriber has 

certified, in accordance with paragraph (c) of this section, is 

medically necessary for that patient; And Provided further, That where 

compensation for drug dispensing is included in other costs allowable 

under the applicable program statute and regulations, the terms and 

conditions of the grant or contract, and the applicable cost principles 

prescribed in 45 CFR part 74, no separate dispensing fee will be 

recognized.



[[Page 148]]



    (b) In determining whether a dispensing fee is reasonable, the 

Secretary will take into account:

    (1) Cost components such as overhead, professional services, and 

profits,

    (2) Payment practices of third-party payment organizations, 

including other Federal programs such as titles XVIII and XIX of the 

Social Security Act; and

    (3) Any surveys by States, universities or others of costs of 

pharmacy operations and the fees charged in the particular area.

    (c) A certification by a prescriber, pursuant to paragraph (a) of 

this section, that a brand of drug is medically necessary for a 

particular patient shall be in the prescriber's own handwriting, in such 

form and manner as the Secretary may prescribe. An example of an 

acceptable certification is the notation ``brand necessary''. A 

procedure for checking a box on a form will not constitute an acceptable 

certification.