Public Law 117-169 (August 16, 2022)
Summary
Public Law 117–169, approved Aug. 16, 2022 [H.R. 5376], an Act to provide for reconciliation pursuant to title II of S. Con. Res. 14. The text begins with Title I, Committee on Finance, Subtitle A, Deficit Reduction, with Section 10001 on amendment of the 1986 Code and Part 1, Corporate Tax Reform. Section 10101, Corporate Alternative Minimum Tax, provides that for an applicable corporation the tentative minimum tax is 15 percent of the adjusted financial statement income over the corporate AMT foreign tax credit, and defines an applicable corporation by an average annual adjusted financial statement income test exceeding $1,000,000,000. The text shown continues through later sections, including Section 13204, Clean Hydrogen.
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Cite this document
“Public Law 117-169 (August 16, 2022).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/plaw-plaw-117publ169-plaw-117publ169/
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PUBLIC LAW 117–169—AUG. 16, 2022
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136 STAT. 1818 PUBLIC LAW 117–169—AUG. 16, 2022
Public Law 117–169
117th Congress
An Act
Aug. 16, 2022
To provide for reconciliation pursuant to title II of S. Con. Res. 14.
[H.R. 5376]
Be it enacted by the Senate and House of Representatives of
Appropriations the United States of America in Congress assembled,
authorizations.
TITLE I—COMMITTEE ON FINANCE
Subtitle A—Deficit Reduction
SECTION 10001. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this sub-
title an amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision
of the Internal Revenue Code of 1986.
PART 1—CORPORATE TAX REFORM
SEC. 10101. CORPORATE ALTERNATIVE MINIMUM TAX.
(a) IMPOSITION OF TAX.—
26 USC 55. (1) IN GENERAL.—Paragraph (2) of section 55(b) is amended
to read as follows:
‘‘(2) CORPORATIONS.—
‘‘(A) APPLICABLE CORPORATIONS.—In the case of an
applicable corporation, the tentative minimum tax for the
taxable year shall be the excess of—
‘‘(i) 15 percent of the adjusted financial statement
income for the taxable year (as determined under sec-
tion 56A), over
‘‘(ii) the corporate AMT foreign tax credit for the
taxable year.
‘‘(B) OTHER CORPORATIONS.—In the case of any corpora-
tion which is not an applicable corporation, the tentative
minimum tax for the taxable year shall be zero.’’.
(2) APPLICABLE CORPORATION.—Section 59 is amended by
adding at the end the following new subsection:
Determinations. ‘‘(k) APPLICABLE CORPORATION.—For purposes of this part—
‘‘(1) APPLICABLE CORPORATION DEFINED.—
‘‘(A) IN GENERAL.—The term ‘applicable corporation’
means, with respect to any taxable year, any corporation
(other than an S corporation, a regulated investment com-
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pany, or a real estate investment trust) which meets the
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1819
average annual adjusted financial statement income test
of subparagraph (B) for one or more taxable years which—
‘‘(i) are prior to such taxable year, and
‘‘(ii) end after December 31, 2021. Effective date.
‘‘(B) AVERAGE ANNUAL ADJUSTED FINANCIAL STATEMENT Time period.
INCOME TEST.—For purposes of this subsection—
‘‘(i) a corporation meets the average annual
adjusted financial statement income test for a taxable
year if the average annual adjusted financial statement
income of such corporation (determined without regard
to section 56A(d)) for the 3-taxable-year period ending
with such taxable year exceeds $1,000,000,000, and
‘‘(ii) in the case of a corporation described in para-
graph (2), such corporation meets the average annual
adjusted financial statement income test for a taxable
year if—
‘‘(I) the corporation meets the requirements
of clause (i) for such taxable year (determined after
the application of paragraph (2)), and
‘‘(II) the average annual adjusted financial
statement income of such corporation (determined
without regard to the application of paragraph
(2) and without regard to section 56A(d)) for the
3-taxable-year-period ending with such taxable
year is $100,000,000 or more.
‘‘(C) EXCEPTION.—Notwithstanding subparagraph (A),
the term ‘applicable corporation’ shall not include any cor-
poration which otherwise meets the requirements of
subparagraph (A) if—
‘‘(i) such corporation—
‘‘(I) has a change in ownership, or
‘‘(II) has a specified number (to be determined
by the Secretary and which shall, as appropriate,
take into account the facts and circumstances of
the taxpayer) of consecutive taxable years,
including the most recent taxable year, in which
the corporation does not meet the average annual
adjusted financial statement income test of
subparagraph (B), and
‘‘(ii) the Secretary determines that it would not
be appropriate to continue to treat such corporation
as an applicable corporation.
The preceding sentence shall not apply to any corporation
if, after the Secretary makes the determination described
in clause (ii), such corporation meets the average annual
adjusted financial statement income test of subparagraph
(B) for any taxable year beginning after the first taxable
year for which such determination applies.
‘‘(D) SPECIAL RULES FOR DETERMINING APPLICABLE COR- Definition.
PORATION STATUS.—
‘‘(i) IN GENERAL.—Solely for purposes of deter-
mining whether a corporation is an applicable corpora-
tion under this paragraph, all adjusted financial state-
ment income of persons treated as a single employer
with such corporation under subsection (a) or (b) of
section 52 (determined with the modifications described
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in clause (ii)) shall be treated as adjusted financial
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136 STAT. 1820 PUBLIC LAW 117–169—AUG. 16, 2022
statement income of such corporation, and adjusted
financial statement income of such corporation shall
be determined without regard to paragraphs (2)(D)(i)
and (11) of section 56A(c).
‘‘(ii) MODIFICATIONS.—For purposes of this
subparagraph—
Applicability. ‘‘(I) section 52(a) shall be applied by sub-
stituting ‘component members’ for ‘members’, and
‘‘(II) for purposes of applying section 52(b),
the term ‘trade or business’ shall include any
activity treated as a trade or business under para-
graph (5) or (6) of section 469(c) (determined with-
out regard to the phrase ‘To the extent provided
in regulations’ in such paragraph (6)).
‘‘(iii) COMPONENT MEMBER.—For purposes of this
subparagraph, the term ‘component member’ has the
meaning given such term by section 1563(b), except
that the determination shall be made without regard
to section 1563(b)(2).
‘‘(E) OTHER SPECIAL RULES.—
Applicability. ‘‘(i) CORPORATIONS IN EXISTENCE FOR LESS THAN
3 YEARS.—If the corporation was in existence for less
than 3-taxable years, subparagraph (B) shall be applied
on the basis of the period during which such corpora-
tion was in existence.
Time period. ‘‘(ii) SHORT TAXABLE YEARS.—Adjusted financial
statement income for any taxable year of less than
12 months shall be annualized by multiplying the
adjusted financial statement income for the short
period by 12 and dividing the result by the number
of months in the short period.
‘‘(iii) TREATMENT OF PREDECESSORS.—Any ref-
erence in this subparagraph to a corporation shall
include a reference to any predecessor of such corpora-
tion.
‘‘(2) SPECIAL RULE FOR FOREIGN-PARENTED MULTINATIONAL
GROUPS.—
‘‘(A) IN GENERAL.—If a corporation is a member of
a foreign-parented multinational group for any taxable
year, then, solely for purposes of determining whether such
corporation meets the average annual adjusted financial
statement income test under paragraph (1)(B)(ii)(I) for such
taxable year, the adjusted financial statement income of
such corporation for such taxable year shall include the
adjusted financial statement income of all members of such
group. Solely for purposes of this subparagraph, adjusted
financial statement income shall be determined without
regard to paragraphs (2)(D)(i), (3), (4), and (11) of section
56A(c).
Definition. ‘‘(B) FOREIGN-PARENTED MULTINATIONAL GROUP.—For
purposes of subparagraph (A), the term ‘foreign-parented
multinational group’ means, with respect to any taxable
year, two or more entities if—
‘‘(i) at least one entity is a domestic corporation
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and another entity is a foreign corporation,
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1821
‘‘(ii) such entities are included in the same
applicable financial statement with respect to such
year, and
‘‘(iii) either—
‘‘(I) the common parent of such entities is a
foreign corporation, or
‘‘(II) if there is no common parent, the entities
are treated as having a common parent which
is a foreign corporation under subparagraph (D).
‘‘(C) FOREIGN CORPORATIONS ENGAGED IN A TRADE OR
BUSINESS WITHIN THE UNITED STATES.—For purposes of this
paragraph, if a foreign corporation is engaged in a trade
or business within the United States, such trade or busi-
ness shall be treated as a separate domestic corporation
that is wholly owned by the foreign corporation.
‘‘(D) OTHER RULES.—The Secretary shall, applying the Applicability.
principles of this section, prescribe rules for the application
of this paragraph, including rules for the determination
of—
‘‘(i) the entities (if any) which are to be to be
treated under subparagraph (B)(iii)(II) as having a
common parent which is a foreign corporation,
‘‘(ii) the entities to be included in a foreign-
parented multinational group, and
‘‘(iii) the common parent of a foreign-parented
multinational group.
‘‘(3) REGULATIONS OR OTHER GUIDANCE.—The Secretary
shall provide regulations or other guidance for the purposes
of carrying out this subsection, including regulations or other
guidance—
‘‘(A) providing a simplified method for determining
whether a corporation meets the requirements of paragraph
(1), and
‘‘’(B) addressing the application of this subsection to
a corporation that experiences a change in ownership.’’.
(3) REDUCTION FOR BASE EROSION AND ANTI-ABUSE TAX.—
Section 55(a)(2) is amended by inserting ‘‘plus, in the case 26 USC 55.
of an applicable corporation, the tax imposed by section 59A’’
before the period at the end.
(4) CONFORMING AMENDMENTS.—
(A) Section 55(a) is amended by striking ‘‘In the case
of a taxpayer other than a corporation, there’’ and inserting
‘‘There’’.
(B)(i) Section 55(b)(1) is amended—
(I) by striking so much as precedes subparagraph
(A) and inserting the following:
‘‘(1) NONCORPORATE TAXPAYERS.—In the case of a taxpayer
other than a corporation—’’, and
(II) by adding at the end the following new
subparagraph:
‘‘(D) ALTERNATIVE MINIMUM TAXABLE INCOME.—The Definition.
term ‘alternative minimum taxable income’ means the tax-
able income of the taxpayer for the taxable year—
‘‘(i) determined with the adjustments provided in
section 56 and section 58, and
‘‘(ii) increased by the amount of the items of tax
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preference described in section 57.
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136 STAT. 1822 PUBLIC LAW 117–169—AUG. 16, 2022
If a taxpayer is subject to the regular tax, such taxpayer
shall be subject to the tax imposed by this section (and,
if the regular tax is determined by reference to an amount
other than taxable income, such amount shall be treated
as the taxable income of such taxpayer for purposes of
the preceding sentence).’’.
26 USC 860E. (ii) Section 860E(a)(4) is amended by striking ‘‘55(b)(2)’’
and inserting ‘‘55(b)(1)(D)’’.
(iii) Section 897(a)(2)(A)(i) is amended by striking
‘‘55(b)(2)’’ and inserting ‘‘55(b)(1)(D)’’.
(C) Section 11(d) is amended by striking ‘‘the tax
imposed by subsection (a)’’ and inserting ‘‘the taxes imposed
by subsection (a) and section 55’’.
(D) Section 12 is amended by adding at the end the
following new paragraph:
‘‘(5) For alternative minimum tax, see section 55.’’.
(E) Section 882(a)(1) is amended by inserting ‘‘, 55,’’
after ‘‘section 11’’.
(F) Section 6425(c)(1)(A) is amended to read as follows:
‘‘(A) the sum of—
‘‘(i) the tax imposed by section 11 or subchapter
L of chapter 1, whichever is applicable, plus
‘‘(ii) the tax imposed by section 55, plus
‘‘(iii) the tax imposed by section 59A, over’’.
(G) Section 6655(e)(2) is amended by inserting ‘‘,
adjusted financial statement income (as defined in section
56A),’’ before ‘‘and modified taxable income’’ each place
it appears in subparagraphs (A)(i) and (B)(i).
(H) Section 6655(g)(1)(A) is amended by redesignating
clauses (ii) and (iii) as clauses (iii) and (iv), respectively,
and by inserting after clause (i) the following new clause:
‘‘(ii) the tax imposed by section 55,’’.
(b) ADJUSTED FINANCIAL STATEMENT INCOME.—
(1) IN GENERAL.—Part VI of subchapter A of chapter 1
is amended by inserting after section 56 the following new
section:
26 USC 56A. ‘‘SEC. 56A. ADJUSTED FINANCIAL STATEMENT INCOME.
Definition. ‘‘(a) IN GENERAL.—For purposes of this part, the term ‘adjusted
financial statement income’ means, with respect to any corporation
for any taxable year, the net income or loss of the taxpayer set
forth on the taxpayer’s applicable financial statement for such tax-
able year, adjusted as provided in this section.
Definition. ‘‘(b) APPLICABLE FINANCIAL STATEMENT.—For purposes of this
section, the term ‘applicable financial statement’ means, with
respect to any taxable year, an applicable financial statement (as
defined in section 451(b)(3) or as specified by the Secretary in
regulations or other guidance) which covers such taxable year.
‘‘(c) GENERAL ADJUSTMENTS.—
‘‘(1) STATEMENTS COVERING DIFFERENT TAXABLE YEARS.—
Appropriate adjustments shall be made in adjusted financial
statement income in any case in which an applicable financial
statement covers a period other than the taxable year.
‘‘(2) SPECIAL RULES FOR RELATED ENTITIES.—
Applicability. ‘‘(A) CONSOLIDATED FINANCIAL STATEMENTS.—If the
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financial results of a taxpayer are reported on the
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1823
applicable financial statement for a group of entities, rules
similar to the rules of section 451(b)(5) shall apply.
‘‘(B) CONSOLIDATED RETURNS.—Except as provided in
regulations prescribed by the Secretary, if the taxpayer
is part of an affiliated group of corporations filing a consoli-
dated return for any taxable year, adjusted financial state-
ment income for such group for such taxable year shall
take into account items on the group’s applicable financial
statement which are properly allocable to members of such
group.
‘‘(C) TREATMENT OF DIVIDENDS AND OTHER AMOUNTS.—
In the case of any corporation which is not included on Determination.
a consolidated return with the taxpayer, adjusted financial
statement income of the taxpayer with respect to such
other corporation shall be determined by only taking into
account the dividends received from such other corporation
(reduced to the extent provided by the Secretary in regula-
tions or other guidance) and other amounts which are
includible in gross income or deductible as a loss under
this chapter (other than amounts required to be included
under sections 951 and 951A or such other amounts as
provided by the Secretary) with respect to such other cor-
poration.
‘‘(D) TREATMENT OF PARTNERSHIPS.—
‘‘(i) IN GENERAL.—Except as provided by the Sec-
retary, if the taxpayer is a partner in a partnership,
adjusted financial statement income of the taxpayer
with respect to such partnership shall be adjusted
to only take into account the taxpayer’s distributive
share of adjusted financial statement income of such
partnership.
‘‘(ii) ADJUSTED FINANCIAL STATEMENT INCOME OF
PARTNERSHIPS.—For the purposes of this part, the
adjusted financial statement income of a partnership
shall be the partnership’s net income or loss set forth
on such partnership’s applicable financial statement
(adjusted under rules similar to the rules of this sec-
tion).
‘‘(3) ADJUSTMENTS TO TAKE INTO ACCOUNT CERTAIN ITEMS
OF FOREIGN INCOME.—
‘‘(A) IN GENERAL.—If, for any taxable year, a taxpayer
is a United States shareholder of one or more controlled
foreign corporations, the adjusted financial statement
income of such taxpayer with respect to such controlled
foreign corporation (as determined under paragraph (2)(C))
shall be adjusted to also take into account such taxpayer’s
pro rata share (determined under rules similar to the rules
under section 951(a)(2)) of items taken into account in
computing the net income or loss set forth on the applicable
financial statement (as adjusted under rules similar to
those that apply in determining adjusted financial state-
ment income) of each such controlled foreign corporation
with respect to which such taxpayer is a United States
shareholder.
‘‘(B) NEGATIVE ADJUSTMENTS.—In any case in which
the adjustment determined under subparagraph (A) would
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result in a negative adjustment for such taxable year—
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136 STAT. 1824 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(i) no adjustment shall be made under this para-
graph for such taxable year, and
‘‘(ii) the amount of the adjustment determined
under this paragraph for the succeeding taxable year
(determined without regard to this paragraph) shall
be reduced by an amount equal to the negative adjust-
ment for such taxable year.
Determination. ‘‘(4) EFFECTIVELY CONNECTED INCOME.—In the case of a
Applicability. foreign corporation, to determine adjusted financial statement
income, the principles of section 882 shall apply.
‘‘(5) ADJUSTMENTS FOR CERTAIN TAXES.—Adjusted financial
statement income shall be appropriately adjusted to disregard
any Federal income taxes, or income, war profits, or excess
profits taxes (within the meaning of section 901) with respect
to a foreign country or possession of the United States, which
are taken into account on the taxpayer’s applicable financial
statement. To the extent provided by the Secretary, the pre-
ceding sentence shall not apply to income, war profits, or excess
profits taxes (within the meaning of section 901) that are
imposed by a foreign country or possession of the United States
and taken into account on the taxpayer’s applicable financial
statement if the taxpayer does not choose to have the benefits
of subpart A of part III of subchapter N for the taxable year.
Regulations. The Secretary shall prescribe such regulations or other guid-
Guidelines. ance as may be necessary and appropriate to provide for the
proper treatment of current and deferred taxes for purposes
of this paragraph, including the time at which such taxes
are properly taken into account.
‘‘(6) ADJUSTMENT WITH RESPECT TO DISREGARDED ENTI-
TIES.—Adjusted financial statement income shall be adjusted
to take into account any adjusted financial statement income
of a disregarded entity owned by the taxpayer.
Applicability. ‘‘(7) SPECIAL RULE FOR COOPERATIVES.—In the case of a
cooperative to which section 1381 applies, the adjusted financial
statement income (determined without regard to this para-
graph) shall be reduced by the amounts referred to in section
1382(b) (relating to patronage dividends and per-unit retain
allocations) to the extent such amounts were not otherwise
taken into account in determining adjusted financial statement
income.
‘‘(8) RULES FOR ALASKA NATIVE CORPORATIONS.—Adjusted
financial statement income shall be appropriately adjusted to
allow—
‘‘(A) cost recovery and depletion attributable to prop-
erty the basis of which is determined under section 21(c)
of the Alaska Native Claims Settlement Act (43 U.S.C.
1620(c)), and
‘‘(B) deductions for amounts payable made pursuant
to section 7(i) or section 7(j) of such Act (43 U.S.C. 1606(i)
and 1606(j)) only at such time as the deductions are allowed
for tax purposes.
‘‘(9) AMOUNTS ATTRIBUTABLE TO ELECTIONS FOR DIRECT PAY-
MENT OF CERTAIN CREDITS.—Adjusted financial statement
income shall be appropriately adjusted to disregard any amount
treated as a payment against the tax imposed by subtitle A
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pursuant to an election under section 48D(d) or 6417, to the
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1825
extent such amount was not otherwise taken into account under
paragraph (5).
‘‘(10) CONSISTENT TREATMENT OF MORTGAGE SERVICING
INCOME OF TAXPAYER OTHER THAN A REGULATED INVESTMENT
COMPANY.—
‘‘(A) IN GENERAL.—Adjusted financial statement income
shall be adjusted so as not to include any item of income
in connection with a mortgage servicing contract any earlier
than when such income is included in gross income under
any other provision of this chapter.
‘‘(B) RULES FOR AMOUNTS NOT REPRESENTING REASON-
ABLE COMPENSATION.—The Secretary shall provide regula- Determination.
tions to prevent the avoidance of taxes imposed by this
chapter with respect to amounts not representing reason-
able compensation (as determined by the Secretary) with
respect to a mortgage servicing contract.
‘‘(11) ADJUSTMENT WITH RESPECT TO DEFINED BENEFIT PEN-
SIONS.—
‘‘(A) IN GENERAL.—Except as otherwise provided in Regulations.
rules prescribed by the Secretary in regulations or other Guidelines.
guidance, adjusted financial statement income shall be—
‘‘(i) adjusted to disregard any amount of income,
cost, or expense that would otherwise be included on
the applicable financial statement in connection with
any covered benefit plan,
‘‘(ii) increased by any amount of income in connec-
tion with any such covered benefit plan that is included
in the gross income of the corporation under any other
provision of this chapter, and
‘‘(iii) reduced by deductions allowed under any
other provision of this chapter with respect to any
such covered benefit plan.
‘‘(B) COVERED BENEFIT PLAN.—For purposes of this Definition.
paragraph, the term ‘covered benefit plan’ means—
‘‘(i) a defined benefit plan (other than a multiem-
ployer plan described in section 414(f)) if the trust
which is part of such plan is an employees’ trust
described in section 401(a) which is exempt from tax
under section 501(a),
‘‘(ii) any qualified foreign plan (as defined in sec-
tion 404A(e)), or
‘‘(iii) any other defined benefit plan which provides
post-employment benefits other than pension benefits.
‘‘(12) TAX-EXEMPT ENTITIES.—In the case of an organization
subject to tax under section 511, adjusted financial statement
income shall be appropriately adjusted to only take into account
any adjusted financial statement income—
‘‘(A) of an unrelated trade or business (as defined in
section 513) of such organization, or
‘‘(B) derived from debt-financed property (as defined
in section 514) to the extent that income from such property
is treated as unrelated business taxable income.
‘‘(13) DEPRECIATION.—Adjusted financial statement income
shall be—
‘‘(A) reduced by depreciation deductions allowed under Applicability.
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section 167 with respect to property to which section 168
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136 STAT. 1826 PUBLIC LAW 117–169—AUG. 16, 2022
applies to the extent of the amount allowed as deductions
in computing taxable income for the taxable year, and
‘‘(B) appropriately adjusted—
‘‘(i) to disregard any amount of depreciation
expense that is taken into account on the taxpayer’s
applicable financial statement with respect to such
property, and
‘‘(ii) to take into account any other item specified
by the Secretary in order to provide that such property
is accounted for in the same manner as it is accounted
for under this chapter.
‘‘(14) QUALIFIED WIRELESS SPECTRUM.—
‘‘(A) IN GENERAL.—Adjusted financial statement income
shall be—
‘‘(i) reduced by amortization deductions allowed
under section 197 with respect to qualified wireless
spectrum to the extent of the amount allowed as deduc-
tions in computing taxable income for the taxable year,
and
‘‘(ii) appropriately adjusted—
‘‘(I) to disregard any amount of amortization
expense that is taken into account on the tax-
payer’s applicable financial statement with respect
to such qualified wireless spectrum, and
‘‘(II) to take into account any other item speci-
fied by the Secretary in order to provide that such
qualified wireless spectrum is accounted for in the
same manner as it is accounted for under this
chapter.
Definition. ‘‘(B) QUALIFIED WIRELESS SPECTRUM.—For purposes of
this paragraph, the term ‘qualified wireless spectrum’
means wireless spectrum which—
‘‘(i) is used in the trade or business of a wireless
telecommunications carrier, and
Effective date. ‘‘(ii) was acquired after December 31, 2007, and
before the date of enactment of this section.
Regulations. ‘‘(15) SECRETARIAL AUTHORITY TO ADJUST ITEMS.—The Sec-
Guidelines. retary shall issue regulations or other guidance to provide
Determination. for such adjustments to adjusted financial statement income
as the Secretary determines necessary to carry out the purposes
of this section, including adjustments—
‘‘(A) to prevent the omission or duplication of any item,
and
‘‘(B) to carry out the principles of part II of subchapter
C of this chapter (relating to corporate liquidations), part
III of subchapter C of this chapter (relating to corporate
organizations and reorganizations), and part II of sub-
chapter K of this chapter (relating to partnership contribu-
tions and distributions).
Determinations. ‘‘(d) DEDUCTION FOR FINANCIAL STATEMENT NET OPERATING
LOSS.—
‘‘(1) IN GENERAL.—Adjusted financial statement income
(determined after application of subsection (c) and without
regard to this subsection) shall be reduced by an amount equal
to the lesser of—
‘‘(A) the aggregate amount of financial statement net
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operating loss carryovers to the taxable year, or
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1827
‘‘(B) 80 percent of adjusted financial statement income
computed without regard to the deduction allowable under
this subsection.
‘‘(2) FINANCIAL STATEMENT NET OPERATING LOSS CARRY-
OVER.—A financial statement net operating loss for any taxable
year shall be a financial statement net operating loss carryover
to each taxable year following the taxable year of the loss.
The portion of such loss which shall be carried to subsequent
taxable years shall be the amount of such loss remaining (if
any) after the application of paragraph (1).
‘‘(3) FINANCIAL STATEMENT NET OPERATING LOSS DEFINED.— Effective date.
For purposes of this subsection, the term ‘financial statement
net operating loss’ means the amount of the net loss (if any)
set forth on the corporation’s applicable financial statement
(determined after application of subsection (c) and without
regard to this subsection) for taxable years ending after
December 31, 2019.
‘‘(e) REGULATIONS AND OTHER GUIDANCE.—The Secretary shall
provide for such regulations and other guidance as necessary to
carry out the purposes of this section, including regulations and
other guidance relating to the effect of the rules of this section
on partnerships with income taken into account by an applicable
corporation.’’.
(2) CLERICAL AMENDMENT.—The table of sections for part
VI of subchapter A of chapter 1 is amended by inserting after 26 USC 55 prec.
the item relating to section 56 the following new item:
‘‘Sec. 56A. Adjusted financial statement income.’’.
(c) CORPORATE AMT FOREIGN TAX CREDIT.—Section 59, as
amended by this section, is amended by adding at the end the 26 USC 59.
following new subsection:
‘‘(l) CORPORATE AMT FOREIGN TAX CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this part, if an applicable
corporation chooses to have the benefits of subpart A of part
III of subchapter N for any taxable year, the corporate AMT
foreign tax credit for the taxable year of the applicable corpora-
tion is an amount equal to sum of—
‘‘(A) the lesser of—
‘‘(i) the aggregate of the applicable corporation’s Determination.
pro rata share (as determined under section 56A(c)(3))
of the amount of income, war profits, and excess profits
taxes (within the meaning of section 901) imposed
by any foreign country or possession of the United
States which are—
‘‘(I) taken into account on the applicable finan-
cial statement of each controlled foreign corpora-
tion with respect to which the applicable corpora-
tion is a United States shareholder, and
‘‘(II) paid or accrued (for Federal income tax
purposes) by each such controlled foreign corpora-
tion, or
‘‘(ii) the product of the amount of the adjustment
under section 56A(c)(3) and the percentage specified
in section 55(b)(2)(A)(i), and
‘‘(B) in the case of an applicable corporation that is
a domestic corporation, the amount of income, war profits,
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and excess profits taxes (within the meaning of section
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136 STAT. 1828 PUBLIC LAW 117–169—AUG. 16, 2022
901) imposed by any foreign country or possession of the
United States to the extent such taxes are—
‘‘(i) taken into account on the applicable corpora-
tion’s applicable financial statement, and
‘‘(ii) paid or accrued (for Federal income tax pur-
poses) by the applicable corporation.
Time period. ‘‘(2) CARRYOVER OF EXCESS TAX PAID.—For any taxable
year for which an applicable corporation chooses to have the
benefits of subpart A of part III of subchapter N, the excess
of the amount described in paragraph (1)(A)(i) over the amount
described in paragraph (1)(A)(ii) shall increase the amount
described in paragraph (1)(A)(i) in any of the first 5 succeeding
taxable years to the extent not taken into account in a prior
taxable year.
‘‘(3) REGULATIONS OR OTHER GUIDANCE.—The Secretary
shall provide for such regulations or other guidance as is nec-
essary to carry out the purposes of this subsection.’’.
(d) TREATMENT OF GENERAL BUSINESS CREDIT.—Section
26 USC 38. 38(c)(6)(E) is amended to read as follows:
Applicability. ‘‘(E) CORPORATIONS.—In the case of a corporation—
‘‘(i) the first sentence of paragraph (1) shall be
applied by substituting ‘25 percent of the taxpayer’s
net income tax as exceeds $25,000’ for ‘the greater
of’ and all that follows,
‘‘(ii) paragraph (2)(A) shall be applied without
regard to clause (ii)(I) thereof, and
‘‘(iii) paragraph (4)(A) shall be applied without
regard to clause (ii)(I) thereof.’’.
(e) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.—
(1) IN GENERAL.—Section 53(e) is amended to read as fol-
lows:
‘‘(e) APPLICATION TO APPLICABLE CORPORATIONS.—In the case
of a corporation—
‘‘(1) subsection (b)(1) shall be applied by substituting ‘the
net minimum tax for all prior taxable years beginning after
2022’ for ‘the adjusted net minimum tax imposed for all prior
taxable years beginning after 1986’, and
‘‘(2) the amount determined under subsection (c)(1) shall
be increased by the amount of tax imposed under section 59A
for the taxable year.’’.
(2) CONFORMING AMENDMENTS.—Section 53(d) is
amended—
(A) in paragraph (2), by striking ‘‘, except that in
the case’’ and all that follows through ‘‘treated as zero’’,
and
(B) by striking paragraph (3).
26 USC 11 note. (f) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2022.
PART 2—EXCISE TAX ON REPURCHASE OF
CORPORATE STOCK
SEC. 10201. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.
(a) IN GENERAL.—Subtitle D is amended by inserting after
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chapter 36 the following new chapter:
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1829
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK 26 USC 4501
prec.
‘‘Sec. 4501. Repurchase of corporate stock.
‘‘SEC. 4501. REPURCHASE OF CORPORATE STOCK. 26 USC 4501.
‘‘(a) GENERAL RULE.—There is hereby imposed on each covered
corporation a tax equal to 1 percent of the fair market value
of any stock of the corporation which is repurchased by such cor-
poration during the taxable year.
‘‘(b) COVERED CORPORATION.—For purposes of this section, the Definition.
term ‘covered corporation’ means any domestic corporation the stock
of which is traded on an established securities market (within
the meaning of section 7704(b)(1)).
‘‘(c) REPURCHASE.—For purposes of this section— Definitions.
‘‘(1) IN GENERAL.—The term ‘repurchase’ means—
‘‘(A) a redemption within the meaning of section 317(b)
with regard to the stock of a covered corporation, and
‘‘(B) any transaction determined by the Secretary to Determination.
be economically similar to a transaction described in
subparagraph (A).
‘‘(2) TREATMENT OF PURCHASES BY SPECIFIED AFFILIATES.—
‘‘(A) IN GENERAL.—The acquisition of stock of a covered
corporation by a specified affiliate of such covered corpora-
tion, from a person who is not the covered corporation
or a specified affiliate of such covered corporation, shall
be treated as a repurchase of the stock of the covered
corporation by such covered corporation.
‘‘(B) SPECIFIED AFFILIATE.—For purposes of this section,
the term ‘specified affiliate’ means, with respect to any
corporation—
‘‘(i) any corporation more than 50 percent of the
stock of which is owned (by vote or by value), directly
or indirectly, by such corporation, and
‘‘(ii) any partnership more than 50 percent of the
capital interests or profits interests of which is held,
directly or indirectly, by such corporation.
‘‘(3) ADJUSTMENT.—The amount taken into account under
subsection (a) with respect to any stock repurchased by a cov-
ered corporation shall be reduced by the fair market value
of any stock issued by the covered corporation during the tax-
able year, including the fair market value of any stock issued
or provided to employees of such covered corporation or
employees of a specified affiliate of such covered corporation
during the taxable year, whether or not such stock is issued
or provided in response to the exercise of an option to purchase
such stock.
‘‘(d) SPECIAL RULES FOR ACQUISITION OF STOCK OF CERTAIN Determinations.
FOREIGN CORPORATIONS.—
‘‘(1) IN GENERAL.—In the case of an acquisition of stock
of an applicable foreign corporation by a specified affiliate of
such corporation (other than a foreign corporation or a foreign
partnership (unless such partnership has a domestic entity
as a direct or indirect partner)) from a person who is not
the applicable foreign corporation or a specified affiliate of
such applicable foreign corporation, for purposes of this sec-
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tion—
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136 STAT. 1830 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(A) such specified affiliate shall be treated as a covered
corporation with respect to such acquisition,
‘‘(B) such acquisition shall be treated as a repurchase
of stock of a covered corporation by such covered corpora-
tion, and
‘‘(C) the adjustment under subsection (c)(3) shall be
determined only with respect to stock issued or provided
by such specified affiliate to employees of the specified
affiliate.
‘‘(2) SURROGATE FOREIGN CORPORATIONS.—In the case of
a repurchase of stock of a covered surrogate foreign corporation
by such covered surrogate foreign corporation, or an acquisition
of stock of a covered surrogate foreign corporation by a specified
affiliate of such corporation, for purposes of this section—
‘‘(A) the expatriated entity with respect to such covered
surrogate foreign corporation shall be treated as a covered
corporation with respect to such repurchase or acquisition,
‘‘(B) such repurchase or acquisition shall be treated
as a repurchase of stock of a covered corporation by such
covered corporation, and
‘‘(C) the adjustment under subsection (c)(3) shall be
determined only with respect to stock issued or provided
by such expatriated entity to employees of the expatriated
entity.
‘‘(3) DEFINITIONS.—For purposes of this subsection—
‘‘(A) APPLICABLE FOREIGN CORPORATION.—The term
‘applicable foreign corporation’ means any foreign corpora-
tion the stock of which is traded on an established securi-
ties market (within the meaning of section 7704(b)(1)).
‘‘(B) COVERED SURROGATE FOREIGN CORPORATION.—The
term ‘covered surrogate foreign corporation’ means any
surrogate foreign corporation (as determined under section
7874(a)(2)(B) by substituting ‘September 20, 2021’ for
‘March 4, 2003’ each place it appears) the stock of which
is traded on an established securities market (within the
meaning of section 7704(b)(1)), but only with respect to
taxable years which include any portion of the applicable
period with respect to such corporation under section
7874(d)(1).
‘‘(C) EXPATRIATED ENTITY.—The term ‘expatriated
entity’ has the meaning given such term by section
7874(a)(2)(A).
‘‘(e) EXCEPTIONS.—Subsection (a) shall not apply—
‘‘(1) to the extent that the repurchase is part of a reorga-
nization (within the meaning of section 368(a)) and no gain
or loss is recognized on such repurchase by the shareholder
under chapter 1 by reason of such reorganization,
‘‘(2) in any case in which the stock repurchased is, or
an amount of stock equal to the value of the stock repurchased
is, contributed to an employer-sponsored retirement plan,
employee stock ownership plan, or similar plan,
‘‘(3) in any case in which the total value of the stock
repurchased during the taxable year does not exceed
$1,000,000,
‘‘(4) under regulations prescribed by the Secretary, in cases
in which the repurchase is by a dealer in securities in the
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ordinary course of business,
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1831
‘‘(5) to repurchases by a regulated investment company
(as defined in section 851) or a real estate investment trust,
or
‘‘(6) to the extent that the repurchase is treated as a
dividend for purposes of this title.
‘‘(f) REGULATIONS AND GUIDANCE.—The Secretary shall pre-
scribe such regulations and other guidance as are necessary or
appropriate to carry out, and to prevent the avoidance of, the
purposes of this section, including regulations and other guidance—
‘‘(1) to prevent the abuse of the exceptions provided by
subsection (e),
‘‘(2) to address special classes of stock and preferred stock,
and
‘‘(3) for the application of the rules under subsection (d).’’.
(b) TAX NOT DEDUCTIBLE.—Paragraph (6) of section 275(a) is 26 USC 275.
amended by inserting ‘‘37,’’ before ‘‘41’’.
(c) CLERICAL AMENDMENT.—The table of chapters for subtitle
D is amended by inserting after the item relating to chapter 36 26 USC 4001
the following new item: prec.
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK’’.
(d) EFFECTIVE DATE.—The amendments made by this section 26 USC 4501
shall apply to repurchases (within the meaning of section 4501(c) note.
of the Internal Revenue Code of 1986, as added by this section)
of stock after December 31, 2022.
PART 3—FUNDING THE INTERNAL REVENUE
SERVICE AND IMPROVING TAXPAYER COM-
PLIANCE
SEC. 10301. ENHANCEMENT OF INTERNAL REVENUE SERVICE
RESOURCES.
IN GENERAL.—The following sums are appropriated, out of any
money in the Treasury not otherwise appropriated, for the fiscal
year ending September 30, 2022:
(1) INTERNAL REVENUE SERVICE.—
(A) IN GENERAL.—
(i) TAXPAYER SERVICES.—For necessary expenses
of the Internal Revenue Service to provide taxpayer
services, including pre-filing assistance and education,
filing and account services, taxpayer advocacy services,
and other services as authorized by 5 U.S.C. 3109,
at such rates as may be determined by the Commis-
sioner, $3,181,500,000, to remain available until Sep-
tember 30, 2031: Provided, That these amounts shall
be in addition to amounts otherwise available for such
purposes.
(ii) ENFORCEMENT.—For necessary expenses for tax
enforcement activities of the Internal Revenue Service
to determine and collect owed taxes, to provide legal
and litigation support, to conduct criminal investiga-
tions (including investigative technology), to provide
digital asset monitoring and compliance activities, to
enforce criminal statutes related to violations of
internal revenue laws and other financial crimes, to
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purchase and hire passenger motor vehicles (31 U.S.C.
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136 STAT. 1832 PUBLIC LAW 117–169—AUG. 16, 2022
1343(b)), and to provide other services as authorized
by 5 U.S.C. 3109, at such rates as may be determined
by the Commissioner, $45,637,400,000, to remain avail-
able until September 30, 2031: Provided, That these
amounts shall be in addition to amounts otherwise
available for such purposes.
(iii) OPERATIONS SUPPORT.—For necessary
expenses of the Internal Revenue Service to support
taxpayer services and enforcement programs, including
rent payments; facilities services; printing; postage;
physical security; headquarters and other IRS-wide
administration activities; research and statistics of
income; telecommunications; information technology
development, enhancement, operations, maintenance,
and security; the hire of passenger motor vehicles (31
U.S.C. 1343(b)); the operations of the Internal Revenue
Service Oversight Board; and other services as author-
ized by 5 U.S.C. 3109, at such rates as may be deter-
mined by the Commissioner, $25,326,400,000, to
remain available until September 30, 2031: Provided,
That these amounts shall be in addition to amounts
otherwise available for such purposes.
(iv) BUSINESS SYSTEMS MODERNIZATION.—For nec-
essary expenses of the Internal Revenue Service’s busi-
ness systems modernization program, including
development of callback technology and other tech-
nology to provide a more personalized customer service
but not including the operation and maintenance of
legacy systems, $4,750,700,000, to remain available
until September 30, 2031: Provided, That these
amounts shall be in addition to amounts otherwise
available for such purposes.
(B) TASK FORCE TO DESIGN AN IRS-RUN FREE ‘‘DIRECT
EFILE’’ TAX RETURN SYSTEM.—For necessary expenses of
the Internal Revenue Service to deliver to Congress, within
nine months following the date of the enactment of this
Act, a report on (I) the cost (including options for differen-
tial coverage based on taxpayer adjusted gross income and
return complexity) of developing and running a free direct
efile tax return system, including costs to build and admin-
ister each release, with a focus on multi-lingual and mobile-
friendly features and safeguards for taxpayer data; (II)
taxpayer opinions, expectations, and level of trust, based
on surveys, for such a free direct efile system; and (III)
the opinions of an independent third-party on the overall
feasibility, approach, schedule, cost, organizational design,
and Internal Revenue Service capacity to deliver such a
direct efile tax return system, $15,000,000, to remain avail-
able until September 30, 2023: Provided, That these
amounts shall be in addition to amounts otherwise avail-
able for such purposes.
(2) TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRA-
TION.—For necessary expenses of the Treasury Inspector Gen-
eral for Tax Administration in carrying out the Inspector Gen-
eral Act of 1978, as amended, including purchase and hire
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of passenger motor vehicles (31 U.S.C. 1343(b)); and services
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1833
authorized by 5 U.S.C. 3109, at such rates as may be deter-
mined by the Inspector General for Tax Administration,
$403,000,000, to remain available until September 30, 2031:
Provided, That these amounts shall be in addition to amounts
otherwise available for such purposes.
(3) OFFICE OF TAX POLICY.—For necessary expenses of the
Office of Tax Policy of the Department of the Treasury to
carry out functions related to promulgating regulations under
the Internal Revenue Code of 1986, $104,533,803, to remain
available until September 30, 2031: Provided, That these
amounts shall be in addition to amounts otherwise available
for such purposes.
(4) UNITED STATES TAX COURT.—For necessary expenses
of the United States Tax Court, including contract reporting
and other services as authorized by 5 U.S.C. 3109;
$153,000,000, to remain available until September 30, 2031:
Provided, That these amounts shall be in addition to amounts
otherwise available for such purposes.
(5) TREASURY DEPARTMENTAL OFFICES.—For necessary
expenses of the Departmental Offices of the Department of
the Treasury to provide for oversight and implementation sup-
port for actions by the Internal Revenue Service to implement
this Act and the amendments made by this Act, $50,000,000,
to remain available until September 30, 2031: Provided, That
these amounts shall be in addition to amounts otherwise avail-
able for such purposes.
Subtitle B—Prescription Drug Pricing
Reform
PART 1—LOWERING PRICES THROUGH DRUG
PRICE NEGOTIATION
SEC. 11001. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-
PRICED SINGLE SOURCE DRUGS.
(a) PROGRAM TO LOWER PRICES FOR CERTAIN HIGH-PRICED
SINGLE SOURCE DRUGS.—Title XI of the Social Security Act is
amended by adding after section 1184 (42 U.S.C. 1320e–3) the
following new part:
‘‘PART E—PRICE NEGOTIATION PROGRAM TO
LOWER PRICES FOR CERTAIN HIGH-PRICED
SINGLE SOURCE DRUGS
‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 42 USC 1320f.
‘‘(a) IN GENERAL.—The Secretary shall establish a Drug Price
Negotiation Program (in this part referred to as the ‘program’).
Under the program, with respect to each price applicability period,
the Secretary shall—
‘‘(1) publish a list of selected drugs in accordance with Publication.
section 1192; Lists.
‘‘(2) enter into agreements with manufacturers of selected Contracts.
drugs with respect to such period, in accordance with section
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1193;
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136 STAT. 1834 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(3) negotiate and, if applicable, renegotiate maximum fair
prices for such selected drugs, in accordance with section 1194;
‘‘(4) carry out the publication and administrative duties
and compliance monitoring in accordance with sections 1195
and 1196.
‘‘(b) DEFINITIONS RELATING TO TIMING.—For purposes of this
part:
‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The term ‘initial
price applicability year’ means a year (beginning with 2026).
‘‘(2) PRICE APPLICABILITY PERIOD.—The term ‘price applica-
bility period’ means, with respect to a qualifying single source
drug, the period beginning with the first initial price applica-
bility year with respect to which such drug is a selected drug
and ending with the last year during which the drug is a
selected drug.
‘‘(3) SELECTED DRUG PUBLICATION DATE.—The term ‘selected
drug publication date’ means, with respect to each initial price
applicability year, February 1 of the year that begins 2 years
prior to such year.
‘‘(4) NEGOTIATION PERIOD.—The term ‘negotiation period’
means, with respect to an initial price applicability year with
respect to a selected drug, the period—
‘‘(A) beginning on the sooner of—
‘‘(i) the date on which the manufacturer of the
drug and the Secretary enter into an agreement under
section 1193 with respect to such drug; or
‘‘(ii) February 28 following the selected drug
publication date with respect to such selected drug;
and
‘‘(B) ending on November 1 of the year that begins
2 years prior to the initial price applicability year.
‘‘(c) OTHER DEFINITIONS.—For purposes of this part:
‘‘(1) MANUFACTURER.—The term ‘manufacturer’ has the
meaning given that term in section 1847A(c)(6)(A).
‘‘(2) MAXIMUM FAIR PRICE ELIGIBLE INDIVIDUAL.—The term
‘maximum fair price eligible individual’ means, with respect
to a selected drug—
‘‘(A) in the case such drug is dispensed to the individual
at a pharmacy, by a mail order service, or by another
dispenser, an individual who is enrolled in a prescription
drug plan under part D of title XVIII or an MA–PD plan
under part C of such title if coverage is provided under
such plan for such selected drug; and
‘‘(B) in the case such drug is furnished or administered
to the individual by a hospital, physician, or other provider
of services or supplier, an individual who is enrolled under
part B of title XVIII, including an individual who is enrolled
in an MA plan under part C of such title, if payment
may be made under part B for such selected drug.
‘‘(3) MAXIMUM FAIR PRICE.—The term ‘maximum fair price’
means, with respect to a year during a price applicability
period and with respect to a selected drug (as defined in section
1192(c)) with respect to such period, the price negotiated pursu-
ant to section 1194, and updated pursuant to section 1195(b),
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as applicable, for such drug and year.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1835
‘‘(4) REFERENCE PRODUCT.—The term ‘reference product’
has the meaning given such term in section 351(i) of the Public
Health Service Act.
‘‘(5) TOTAL EXPENDITURES.—The term ‘total expenditures’
includes, in the case of expenditures with respect to part D
of title XVIII, the total gross covered prescription drug costs
(as defined in section 1860D–15(b)(3)). The term ‘total expendi-
tures’ excludes, in the case of expenditures with respect to
part B of such title, expenditures for a drug or biological product
that are bundled or packaged into the payment for another
service.
‘‘(6) UNIT.—The term ‘unit’ means, with respect to a drug
or biological product, the lowest identifiable amount (such as
a capsule or tablet, milligram of molecules, or grams) of the
drug or biological product that is dispensed or furnished.
‘‘(d) TIMING FOR INITIAL PRICE APPLICABILITY YEAR 2026.— Regulations.
Notwithstanding the provisions of this part, in the case of initial Applicability.
price applicability year 2026, the following rules shall apply for
purposes of implementing the program:
‘‘(1) Subsection (b)(3) shall be applied by substituting ‘Sep-
tember 1, 2023’ for ‘, with respect to each initial price applica-
bility year, February 1 of the year that begins 2 years prior
to such year’.
‘‘(2) Subsection (b)(4) shall be applied—
‘‘(A) in subparagraph (A)(ii), by substituting ‘October
1, 2023’ for ‘February 28 following the selected drug
publication date with respect to such selected drug’; and
‘‘(B) in subparagraph (B), by substituting ‘August 1,
2024’ for ‘November 1 of the year that begins 2 years
prior to the initial price applicability year’.
‘‘(3) Section 1192 shall be applied—
‘‘(A) in subsection (b)(1)(A), by substituting ‘during the
period beginning on June 1, 2022, and ending on May
31, 2023’ for ‘during the most recent period of 12 months
prior to the selected drug publication date (but ending
not later than October 31 of the year prior to the year
of such drug publication date), with respect to such year,
for which data are available’; and
‘‘(B) in subsection (d)(1)(A), by substituting ‘during the
period beginning on June 1, 2022, and ending on May
31, 2023’ for ‘during the most recent period for which
data are available of at least 12 months prior to the selected
drug publication date (but ending no later than October
31 of the year prior to the year of such drug publication
date), with respect to such year’.
‘‘(4) Section 1193(a) shall be applied by substituting
‘October 1, 2023’ for ‘February 28 following the selected drug
publication date with respect to such selected drug’.
‘‘(5) Section 1194(b)(2) shall be applied—
‘‘(A) in subparagraph (A), by substituting ‘October 2,
2023’ for ‘March 1 of the year of the selected drug publica-
tion date, with respect to the selected drug’;
‘‘(B) in subparagraph (B), by substituting ‘February
1, 2024’ for ‘the June 1 following the selected drug publica-
tion date’; and
‘‘(C) in subparagraph (E), by substituting ‘August 1,
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2024’ for ‘the first day of November following the selected
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136 STAT. 1836 PUBLIC LAW 117–169—AUG. 16, 2022
drug publication date, with respect to the initial price
applicability year ’.
‘‘(6) Section 1195(a)(1) shall be applied by substituting ‘Sep-
tember 1, 2024’ for ‘November 30 of the year that is 2 years
prior to such initial price applicability year’.
42 USC 1320f–1. ‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS
SELECTED DRUGS.
Deadlines. ‘‘(a) IN GENERAL.—Not later than the selected drug publication
Publication. date with respect to an initial price applicability year, in accordance
List. with subsection (b), the Secretary shall select and publish a list
Time periods.
of—
‘‘(1) with respect to the initial price applicability year 2026,
10 negotiation-eligible drugs described in subparagraph (A) of
subsection (d)(1), but not subparagraph (B) of such subsection,
with respect to such year (or, all (if such number is less than
10) such negotiation-eligible drugs with respect to such year);
‘‘(2) with respect to the initial price applicability year 2027,
15 negotiation-eligible drugs described in subparagraph (A) of
subsection (d)(1), but not subparagraph (B) of such subsection,
with respect to such year (or, all (if such number is less than
15) such negotiation-eligible drugs with respect to such year);
‘‘(3) with respect to the initial price applicability year 2028,
15 negotiation-eligible drugs described in subparagraph (A) or
(B) of subsection (d)(1) with respect to such year (or, all (if
such number is less than 15) such negotiation-eligible drugs
with respect to such year); and
‘‘(4) with respect to the initial price applicability year 2029
or a subsequent year, 20 negotiation-eligible drugs described
in subparagraph (A) or (B) of subsection (d)(1), with respect
to such year (or, all (if such number is less than 20) such
negotiation-eligible drugs with respect to such year).
Subject to subsection (c)(2) and section 1194(f)(5), each drug pub-
lished on the list pursuant to the previous sentence shall be subject
to the negotiation process under section 1194 for the negotiation
period with respect to such initial price applicability year (and
the renegotiation process under such section as applicable for any
subsequent year during the applicable price applicability period).
‘‘(b) SELECTION OF DRUGS.—
‘‘(1) IN GENERAL.—In carrying out subsection (a), subject
to paragraph (2), the Secretary shall, with respect to an initial
price applicability year, do the following:
Determination. ‘‘(A) Rank negotiation-eligible drugs described in sub-
Time periods. section (d)(1) according to the total expenditures for such
drugs under parts B and D of title XVIII, as determined
by the Secretary, during the most recent period of 12
months prior to the selected drug publication date (but
ending not later than October 31 of the year prior to
the year of such drug publication date), with respect to
such year, for which data are available, with the negotia-
tion-eligible drugs with the highest total expenditures being
ranked the highest.
‘‘(B) Select from such ranked drugs with respect to
such year the negotiation-eligible drugs with the highest
such rankings.
Applicability. ‘‘(2) HIGH SPEND PART D DRUGS FOR 2026 AND 2027.—With
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respect to the initial price applicability year 2026 and with
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1837
respect to the initial price applicability year 2027, the Secretary
shall apply paragraph (1) as if the reference to ‘negotiation-
eligible drugs described in subsection (d)(1)’ were a reference
to ‘negotiation-eligible drugs described in subsection (d)(1)(A)’
and as if the reference to ‘total expenditures for such drugs
under parts B and D of title XVIII’ were a reference to ‘total
expenditures for such drugs under part D of title XVIII’.
‘‘(c) SELECTED DRUG.—
‘‘(1) IN GENERAL.—For purposes of this part, in accordance Time period.
with subsection (e)(2) and subject to paragraph (2), each nego- Determination.
tiation-eligible drug included on the list published under sub-
section (a) with respect to an initial price applicability year
shall be referred to as a ‘selected drug’ with respect to such
year and each subsequent year beginning before the first year
that begins at least 9 months after the date on which the
Secretary determines at least one drug or biological product—
‘‘(A) is approved or licensed (as applicable)—
‘‘(i) under section 505(j) of the Federal Food, Drug,
and Cosmetic Act using such drug as the listed drug;
or
‘‘(ii) under section 351(k) of the Public Health
Service Act using such drug as the reference product;
and
‘‘(B) is marketed pursuant to such approval or licen-
sure.
‘‘(2) CLARIFICATION.—A negotiation-eligible drug—
‘‘(A) that is included on the list published under sub-
section (a) with respect to an initial price applicability
year; and
‘‘(B) for which the Secretary makes a determination
described in paragraph (1) before or during the negotiation
period with respect to such initial price applicability year;
shall not be subject to the negotiation process under section
1194 with respect to such negotiation period and shall continue
to be considered a selected drug under this part with respect
to the number of negotiation-eligible drugs published on the
list under subsection (a) with respect to such initial price
applicability year.
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— Determinations.
‘‘(1) IN GENERAL.—For purposes of this part, subject to Time periods.
Definition.
paragraph (2), the term ‘negotiation-eligible drug’ means, with
respect to the selected drug publication date with respect to
an initial price applicability year, a qualifying single source
drug, as defined in subsection (e), that is described in either
of the following subparagraphs (or, with respect to the initial
price applicability year 2026 or 2027, that is described in
subparagraph (A)):
‘‘(A) PART D HIGH SPEND DRUGS.—The qualifying single
source drug is, determined in accordance with subsection
(e)(2), among the 50 qualifying single source drugs with
the highest total expenditures under part D of title XVIII,
as determined by the Secretary in accordance with para-
graph (3), during the most recent 12-month period for
which data are available prior to such selected drug
publication date (but ending no later than October 31 of
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the year prior to the year of such drug publication date).
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136 STAT. 1838 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(B) PART B HIGH SPEND DRUGS.—The qualifying single
source drug is, determined in accordance with subsection
(e)(2), among the 50 qualifying single source drugs with
the highest total expenditures under part B of title XVIII,
as determined by the Secretary in accordance with para-
graph (3), during such most recent 12-month period, as
described in subparagraph (A).
‘‘(2) EXCEPTION FOR SMALL BIOTECH DRUGS.—
‘‘(A) IN GENERAL.—Subject to subparagraph (C), the
term ‘negotiation-eligible drug’ shall not include, with
respect to the initial price applicability years 2026, 2027,
and 2028, a qualifying single source drug that meets either
of the following:
‘‘(i) PART D DRUGS.—The total expenditures for
the qualifying single source drug under part D of title
XVIII, as determined by the Secretary in accordance
with paragraph (3)(B), during 2021—
‘‘(I) are equal to or less than 1 percent of
the total expenditures under such part D, as so
determined, for all covered part D drugs (as
defined in section 1860D–2(e)) during such year;
and
‘‘(II) are equal to at least 80 percent of the
total expenditures under such part D, as so deter-
mined, for all covered part D drugs for which
the manufacturer of the drug has an agreement
in effect under section 1860D–14A during such
year.
‘‘(ii) PART B DRUGS.—The total expenditures for
the qualifying single source drug under part B of title
XVIII, as determined by the Secretary in accordance
with paragraph (3)(B), during 2021—
‘‘(I) are equal to or less than 1 percent of
the total expenditures under such part B, as so
determined, for all qualifying single source drugs
for which payment may be made under such part
B during such year; and
‘‘(II) are equal to at least 80 percent of the
total expenditures under such part B, as so deter-
mined, for all qualifying single source drugs of
the manufacturer for which payment may be made
under such part B during such year.
‘‘(B) CLARIFICATIONS RELATING TO MANUFACTURERS.—
‘‘(i) AGGREGATION RULE.—All persons treated as
a single employer under subsection (a) or (b) of section
52 of the Internal Revenue Code of 1986 shall be
treated as one manufacturer for purposes of this para-
graph.
Effective dates. ‘‘(ii) LIMITATION.—A drug shall not be considered
to be a qualifying single source drug described in clause
(i) or (ii) of subparagraph (A) if the manufacturer of
such drug is acquired after 2021 by another manufac-
turer that does not meet the definition of a specified
manufacturer under section 1860D–14C(g)(4)(B)(ii),
effective at the beginning of the plan year immediately
following such acquisition or, in the case of an acquisi-
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tion before 2025, effective January 1, 2025.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1839
‘‘(C) DRUGS NOT INCLUDED AS SMALL BIOTECH DRUGS.—
A new formulation, such as an extended release formula-
tion, of a qualifying single source drug shall not be consid-
ered a qualifying single source drug described in subpara-
graph (A).
‘‘(3) CLARIFICATIONS AND DETERMINATIONS.—
‘‘(A) PREVIOUSLY SELECTED DRUGS AND SMALL BIOTECH
DRUGS EXCLUDED.—In applying subparagraphs (A) and (B)
of paragraph (1), the Secretary shall not consider or count—
‘‘(i) drugs that are already selected drugs; and
‘‘(ii) for initial price applicability years 2026, 2027,
and 2028, qualifying single source drugs described in
paragraph (2)(A).
‘‘(B) USE OF DATA.—In determining whether a quali-
fying single source drug satisfies any of the criteria
described in paragraph (1) or (2), the Secretary shall use
data that is aggregated across dosage forms and strengths
of the drug, including new formulations of the drug, such
as an extended release formulation, and not based on the
specific formulation or package size or package type of
the drug.
‘‘(e) QUALIFYING SINGLE SOURCE DRUG.—
‘‘(1) IN GENERAL.—For purposes of this part, the term ‘quali- Definition.
fying single source drug’ means, with respect to an initial
price applicability year, subject to paragraphs (2) and (3), a
covered part D drug (as defined in section 1860D–2(e)) that
is described in any of the following or a drug or biological
product for which payment may be made under part B of
title XVIII that is described in any of the following:
‘‘(A) DRUG PRODUCTS.—A drug— Time periods.
‘‘(i) that is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and is marketed
pursuant to such approval;
‘‘(ii) for which, as of the selected drug publication
date with respect to such initial price applicability
year, at least 7 years will have elapsed since the date
of such approval; and
‘‘(iii) that is not the listed drug for any drug that
is approved and marketed under section 505(j) of such
Act.
‘‘(B) BIOLOGICAL PRODUCTS.—A biological product—
‘‘(i) that is licensed under section 351(a) of the
Public Health Service Act and is marketed under sec-
tion 351 of such Act;
‘‘(ii) for which, as of the selected drug publication
date with respect to such initial price applicability
year, at least 11 years will have elapsed since the
date of such licensure; and
‘‘(iii) that is not the reference product for any
biological product that is licensed and marketed under
section 351(k) of such Act.
‘‘(2) TREATMENT OF AUTHORIZED GENERIC DRUGS.—
‘‘(A) IN GENERAL.—In the case of a qualifying single
source drug described in subparagraph (A) or (B) of para-
graph (1) that is the listed drug (as such term is used
in section 505(j) of the Federal Food, Drug, and Cosmetic
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Act) or a product described in clause (ii) of subparagraph
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136 STAT. 1840 PUBLIC LAW 117–169—AUG. 16, 2022
(B), with respect to an authorized generic drug, in applying
the provisions of this part, such authorized generic drug
and such listed drug or such product shall be treated
as the same qualifying single source drug.
‘‘(B) AUTHORIZED GENERIC DRUG DEFINED.—For pur-
poses of this paragraph, the term ‘authorized generic drug’
means—
‘‘(i) in the case of a drug, an authorized generic
drug (as such term is defined in section 505(t)(3) of
the Federal Food, Drug, and Cosmetic Act); and
‘‘(ii) in the case of a biological product, a product
that—
‘‘(I) has been licensed under section 351(a)
of such Act; and
‘‘(II) is marketed, sold, or distributed directly
or indirectly to retail class of trade under a dif-
ferent labeling, packaging (other than repackaging
as the reference product in blister packs, unit
doses, or similar packaging for use in institutions),
product code, labeler code, trade name, or trade
mark than the reference product.
‘‘(3) EXCLUSIONS.—In this part, the term ‘qualifying single
source drug’ does not include any of the following:
‘‘(A) CERTAIN ORPHAN DRUGS.—A drug that is des-
ignated as a drug for only one rare disease or condition
under section 526 of the Federal Food, Drug, and Cosmetic
Act and for which the only approved indication (or indica-
tions) is for such disease or condition.
Time periods. ‘‘(B) LOW SPEND MEDICARE DRUGS.—A drug or biological
Determination. product with respect to which the total expenditures under
parts B and D of title XVIII, as determined by the Secretary
in accordance with subsection (d)(3)(B)—
‘‘(i) with respect to initial price applicability year
2026, is less than, during the period beginning on
June 1, 2022, and ending on May 31, 2023,
$200,000,000;
‘‘(ii) with respect to initial price applicability year
2027, is less than, during the most recent 12-month
period applicable under subparagraphs (A) and (B) of
subsection (d)(1) for such year, the dollar amount speci-
fied in clause (i) increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; United States city average) for
the period beginning on June 1, 2023, and ending
on September 30, 2024; or
‘‘(iii) with respect to a subsequent initial price
applicability year, is less than, during the most recent
12-month period applicable under subparagraphs (A)
and (B) of subsection (d)(1) for such year, the dollar
amount specified in this subparagraph for the previous
initial price applicability year increased by the annual
percentage increase in such consumer price index for
the 12-month period ending on September 30 of the
year prior to the year of the selected drug publication
date with respect to such subsequent initial price
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applicability year.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1841
‘‘(C) PLASMA-DERIVED PRODUCTS.—A biological product
that is derived from human whole blood or plasma.
‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 42 USC 1320f–2.
‘‘(a) IN GENERAL.—For purposes of section 1191(a)(2), the Sec- Deadline.
retary shall enter into agreements with manufacturers of selected
drugs with respect to a price applicability period, by not later
than February 28 following the selected drug publication date with
respect to such selected drug, under which—
‘‘(1) during the negotiation period for the initial price Determination.
applicability year for the selected drug, the Secretary and the Deadline.
manufacturer, in accordance with section 1194, negotiate to
determine (and, by not later than the last date of such period,
agree to) a maximum fair price for such selected drug of the
manufacturer in order for the manufacturer to provide access
to such price—
‘‘(A) to maximum fair price eligible individuals who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(2) and are dispensed such drug (and
to pharmacies, mail order services, and other dispensers,
with respect to such maximum fair price eligible individuals
who are dispensed such drugs) during, subject to paragraph
(2), the price applicability period; and
‘‘(B) to hospitals, physicians, and other providers of
services and suppliers with respect to maximum fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during, subject to
paragraph (2), the price applicability period;
‘‘(2) the Secretary and the manufacturer shall, in accord- Deadline.
ance with section 1194, renegotiate (and, by not later than
the last date of the period of renegotiation, agree to) the max-
imum fair price for such drug, in order for the manufacturer
to provide access to such maximum fair price (as so renegoti-
ated)—
‘‘(A) to maximum fair price eligible individuals who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(2) and are dispensed such drug (and
to pharmacies, mail order services, and other dispensers,
with respect to such maximum fair price eligible individuals
who are dispensed such drugs) during any year during
the price applicability period (beginning after such renegoti-
ation) with respect to such selected drug; and
‘‘(B) to hospitals, physicians, and other providers of
services and suppliers with respect to maximum fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during any year
described in subparagraph (A);
‘‘(3) subject to subsection (d), access to the maximum fair
price (including as renegotiated pursuant to paragraph (2)),
with respect to such a selected drug, shall be provided by
the manufacturer to—
‘‘(A) maximum fair price eligible individuals, who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(2), at the pharmacy, mail order service,
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or other dispenser at the point-of-sale of such drug (and
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136 STAT. 1842 PUBLIC LAW 117–169—AUG. 16, 2022
shall be provided by the manufacturer to the pharmacy,
mail order service, or other dispenser, with respect to such
maximum fair price eligible individuals who are dispensed
such drugs), as described in paragraph (1)(A) or (2)(A),
as applicable; and
‘‘(B) hospitals, physicians, and other providers of serv-
ices and suppliers with respect to maximum fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug, as described in para-
graph (1)(B) or (2)(B), as applicable;
‘‘(4) the manufacturer submits to the Secretary, in a form
and manner specified by the Secretary, for the negotiation
period for the price applicability period (and, if applicable,
before any period of renegotiation pursuant to section 1194(f))
with respect to such drug—
‘‘(A) information on the non-Federal average manufac-
turer price (as defined in section 8126(h)(5) of title 38,
United States Code) for the drug for the applicable year
or period; and
Requirement. ‘‘(B) information that the Secretary requires to carry
out the negotiation (or renegotiation process) under this
part; and
Compliance. ‘‘(5) the manufacturer complies with requirements deter-
Requirements. mined by the Secretary to be necessary for purposes of admin-
Determination. istering the program and monitoring compliance with the pro-
gram.
‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS NO LONGER A
SELECTED DRUG.—An agreement entered into under this section
shall be effective, with respect to a selected drug, until such drug
is no longer considered a selected drug under section 1192(c).
Determination. ‘‘(c) CONFIDENTIALITY OF INFORMATION.—Information submitted
to the Secretary under this part by a manufacturer of a selected
drug that is proprietary information of such manufacturer (as deter-
mined by the Secretary) shall be used only by the Secretary or
disclosed to and used by the Comptroller General of the United
States for purposes of carrying out this part.
‘‘(d) NONDUPLICATION WITH 340B CEILING PRICE.—Under an
agreement entered into under this section, the manufacturer of
a selected drug—
‘‘(1) shall not be required to provide access to the maximum
fair price under subsection (a)(3), with respect to such selected
drug and maximum fair price eligible individuals who are
eligible to be furnished, administered, or dispensed such
selected drug at a covered entity described in section 340B(a)(4)
of the Public Health Service Act, to such covered entity if
such selected drug is subject to an agreement described in
section 340B(a)(1) of such Act and the ceiling price (defined
in section 340B(a)(1) of such Act) is lower than the maximum
fair price for such selected drug; and
Requirement. ‘‘(2) shall be required to provide access to the maximum
fair price to such covered entity with respect to maximum
fair price eligible individuals who are eligible to be furnished,
administered, or dispensed such selected drug at such entity
at such ceiling price in a nonduplicated amount to the ceiling
price if such maximum fair price is below the ceiling price
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for such selected drug.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1843
‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 42 USC 1320f–3.
‘‘(a) IN GENERAL.—For purposes of this part, under an agree-
ment under section 1193 between the Secretary and a manufacturer
of a selected drug (or selected drugs), with respect to the period
for which such agreement is in effect and in accordance with sub-
sections (b), (c), and (d), the Secretary and the manufacturer—
‘‘(1) shall during the negotiation period with respect to
such drug, in accordance with this section, negotiate a max-
imum fair price for such drug for the purpose described in
section 1193(a)(1); and
‘‘(2) renegotiate, in accordance with the process specified
pursuant to subsection (f), such maximum fair price for such
drug for the purpose described in section 1193(a)(2) if such
drug is a renegotiation-eligible drug under such subsection.
‘‘(b) NEGOTIATION PROCESS REQUIREMENTS.—
‘‘(1) METHODOLOGY AND PROCESS.—The Secretary shall
develop and use a consistent methodology and process, in
accordance with paragraph (2), for negotiations under sub-
section (a) that aims to achieve the lowest maximum fair price
for each selected drug.
‘‘(2) SPECIFIC ELEMENTS OF NEGOTIATION PROCESS.—As part Applicability.
of the negotiation process under this section, with respect to Deadlines.
a selected drug and the negotiation period with respect to
the initial price applicability year with respect to such drug,
the following shall apply:
‘‘(A) SUBMISSION OF INFORMATION.—Not later than
March 1 of the year of the selected drug publication date,
with respect to the selected drug, the manufacturer of
the drug shall submit to the Secretary, in accordance with
section 1193(a)(4), the information described in such sec-
tion.
‘‘(B) INITIAL OFFER BY SECRETARY.—Not later than the Proposal.
June 1 following the selected drug publication date, the
Secretary shall provide the manufacturer of the selected
drug with a written initial offer that contains the Sec-
retary’s proposal for the maximum fair price of the drug
and a concise justification based on the factors described
in section 1194(e) that were used in developing such offer.
‘‘(C) RESPONSE TO INITIAL OFFER.— Proposal.
‘‘(i) IN GENERAL.—Not later than 30 days after
the date of receipt of an initial offer under subpara-
graph (B), the manufacturer shall either accept such
offer or propose a counteroffer to such offer.
‘‘(ii) COUNTEROFFER REQUIREMENTS.—If a manu-
facturer proposes a counteroffer, such counteroffer—
‘‘(I) shall be in writing; and
‘‘(II) shall be justified based on the factors
described in subsection (e).
‘‘(D) RESPONSE TO COUNTEROFFER.—After receiving a
counteroffer under subparagraph (C), the Secretary shall
respond in writing to such counteroffer.
‘‘(E) DEADLINE.—All negotiations between the Sec-
retary and the manufacturer of the selected drug shall
end prior to the first day of November following the selected
drug publication date, with respect to the initial price
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applicability year.
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136 STAT. 1844 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(F) LIMITATIONS ON OFFER AMOUNT.—In negotiating
the maximum fair price of a selected drug, with respect
to the initial price applicability year for the selected drug,
and, as applicable, in renegotiating the maximum fair price
for such drug, with respect to a subsequent year during
the price applicability period for such drug, the Secretary
shall not offer (or agree to a counteroffer for) a maximum
fair price for the selected drug that—
‘‘(i) exceeds the ceiling determined under sub-
section (c) for the selected drug and year; or
‘‘(ii) as applicable, is less than the floor determined
under subsection (d) for the selected drug and year.
‘‘(c) CEILING FOR MAXIMUM FAIR PRICE.—
‘‘(1) GENERAL CEILING.—
‘‘(A) IN GENERAL.—The maximum fair price negotiated
under this section for a selected drug, with respect to
the first initial price applicability year of the price applica-
bility period with respect to such drug, shall not exceed
the lower of the amount under subparagraph (B) or the
amount under subparagraph (C).
‘‘(B) SUBPARAGRAPH (B) AMOUNT.—An amount equal
to the following:
‘‘(i) COVERED PART D DRUG.—In the case of a cov-
ered part D drug (as defined in section 1860D–2(e)),
the sum of the plan specific enrollment weighted
amounts for each prescription drug plan or MA–PD
plan (as determined under paragraph (2)).
‘‘(ii) PART B DRUG OR BIOLOGICAL.—In the case
of a drug or biological product for which payment may
be made under part B of title XVIII, the payment
amount under section 1847A(b)(4) for the drug or
biological product for the year prior to the year of
the selected drug publication date with respect to the
initial price applicability year for the drug or biological
product.
‘‘(C) SUBPARAGRAPH (C) AMOUNT.—An amount equal
to the applicable percent described in paragraph (3), with
respect to such drug, of the following:
‘‘(i) INITIAL PRICE APPLICABILITY YEAR 2026.—In the
case of a selected drug with respect to which such
initial price applicability year is 2026, the average
non-Federal average manufacturer price for such drug
for 2021 (or, in the case that there is not an average
non-Federal average manufacturer price available for
such drug for 2021, for the first full year following
the market entry for such drug), increased by the
percentage increase in the consumer price index for
all urban consumers (all items; United States city aver-
age) from September 2021 (or December of such first
full year following the market entry), as applicable,
to September of the year prior to the year of the
selected drug publication date with respect to such
initial price applicability year.
‘‘(ii) INITIAL PRICE APPLICABILITY YEAR 2027 AND
SUBSEQUENT YEARS.—In the case of a selected drug
with respect to which such initial price applicability
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year is 2027 or a subsequent year, the lower of—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1845
‘‘(I) the average non-Federal average manufac-
turer price for such drug for 2021 (or, in the case
that there is not an average non-Federal average
manufacturer price available for such drug for
2021, for the first full year following the market
entry for such drug), increased by the percentage
increase in the consumer price index for all urban
consumers (all items; United States city average)
from September 2021 (or December of such first
full year following the market entry), as applicable,
to September of the year prior to the year of the
selected drug publication date with respect to such
initial price applicability year; or
‘‘(II) the average non-Federal average manu-
facturer price for such drug for the year prior
to the selected drug publication date with respect
to such initial price applicability year.
‘‘(2) PLAN SPECIFIC ENROLLMENT WEIGHTED AMOUNT.—For
purposes of paragraph (1)(B)(i), the plan specific enrollment
weighted amount for a prescription drug plan or an MA–PD
plan with respect to a covered Part D drug is an amount
equal to the product of—
‘‘(A) the negotiated price of the drug under such plan
under part D of title XVIII, net of all price concessions
received by such plan or pharmacy benefit managers on
behalf of such plan, for the most recent year for which
data is available; and
‘‘(B) a fraction—
‘‘(i) the numerator of which is the total number
of individuals enrolled in such plan in such year; and
‘‘(ii) the denominator of which is the total number
of individuals enrolled in a prescription drug plan or
an MA–PD plan in such year.
‘‘(3) APPLICABLE PERCENT DESCRIBED.—For purposes of this
subsection, the applicable percent described in this paragraph
is the following:
‘‘(A) SHORT-MONOPOLY DRUGS AND VACCINES.—With
respect to a selected drug (other than an extended-
monopoly drug and a long-monopoly drug), 75 percent.
‘‘(B) EXTENDED-MONOPOLY DRUGS.—With respect to an
extended-monopoly drug, 65 percent.
‘‘(C) LONG-MONOPOLY DRUGS.—With respect to a long-
monopoly drug, 40 percent.
‘‘(4) EXTENDED-MONOPOLY DRUG DEFINED.—
‘‘(A) IN GENERAL.—In this part, subject to subpara- Time period.
graph (B), the term ‘extended-monopoly drug’ means, with
respect to an initial price applicability year, a selected
drug for which at least 12 years, but fewer than 16 years,
have elapsed since the date of approval of such drug under
section 505(c) of the Federal Food, Drug, and Cosmetic
Act or since the date of licensure of such drug under
section 351(a) of the Public Health Service Act, as
applicable.
‘‘(B) EXCLUSIONS.—The term ‘extended-monopoly drug’
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shall not include any of the following:
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136 STAT. 1846 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(i) A vaccine that is licensed under section 351
of the Public Health Service Act and marketed pursu-
ant to such section.
‘‘(ii) A selected drug for which a manufacturer
had an agreement under this part with the Secretary
with respect to an initial price applicability year that
is before 2030.
‘‘(C) CLARIFICATION.—Nothing in subparagraph (B)(ii)
shall limit the transition of a selected drug described in
paragraph (3)(A) to a long-monopoly drug if the selected
drug meets the definition of a long-monopoly drug.
‘‘(5) LONG-MONOPOLY DRUG DEFINED.—
Time period. ‘‘(A) IN GENERAL.—In this part, subject to subpara-
graph (B), the term ‘long-monopoly drug’ means, with
respect to an initial price applicability year, a selected
drug for which at least 16 years have elapsed since the
date of approval of such drug under section 505(c) of the
Federal Food, Drug, and Cosmetic Act or since the date
of licensure of such drug under section 351(a) of the Public
Health Service Act, as applicable.
‘‘(B) EXCLUSION.—The term ‘long-monopoly drug’ shall
not include a vaccine that is licensed under section 351
of the Public Health Service Act and marketed pursuant
to such section.
Time period. ‘‘(6) AVERAGE NON-FEDERAL AVERAGE MANUFACTURER
PRICE.—In this part, the term ‘average non-Federal average
manufacturer price’ means the average of the non-Federal aver-
age manufacturer price (as defined in section 8126(h)(5) of
title 38, United States Code) for the 4 calendar quarters of
the year involved.
Time periods. ‘‘(d) TEMPORARY FLOOR FOR SMALL BIOTECH DRUGS.—In the
case of a selected drug that is a qualifying single source drug
described in section 1192(d)(2) and with respect to which the first
initial price applicability year of the price applicability period with
respect to such drug is 2029 or 2030, the maximum fair price
negotiated under this section for such drug for such initial price
applicability year may not be less than 66 percent of the average
non-Federal average manufacturer price for such drug (as defined
in subsection (c)(6)) for 2021 (or, in the case that there is not
an average non-Federal average manufacturer price available for
such drug for 2021, for the first full year following the market
entry for such drug), increased by the percentage increase in the
consumer price index for all urban consumers (all items; United
States city average) from September 2021 (or December of such
first full year following the market entry), as applicable, to Sep-
tember of the year prior to the selected drug publication date
with respect to the initial price applicability year.
‘‘(e) FACTORS.—For purposes of negotiating the maximum fair
price of a selected drug under this part with the manufacturer
of the drug, the Secretary shall consider the following factors,
as applicable to the drug, as the basis for determining the offers
and counteroffers under subsection (b) for the drug:
‘‘(1) MANUFACTURER-SPECIFIC DATA.—The following data,
with respect to such selected drug, as submitted by the manu-
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facturer:
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1847
‘‘(A) Research and development costs of the manufac-
turer for the drug and the extent to which the manufacturer
has recouped research and development costs.
‘‘(B) Current unit costs of production and distribution
of the drug.
‘‘(C) Prior Federal financial support for novel thera-
peutic discovery and development with respect to the drug.
‘‘(D) Data on pending and approved patent applications,
exclusivities recognized by the Food and Drug Administra-
tion, and applications and approvals under section 505(c)
of the Federal Food, Drug, and Cosmetic Act or section
351(a) of the Public Health Service Act for the drug.
‘‘(E) Market data and revenue and sales volume data
for the drug in the United States.
‘‘(2) EVIDENCE ABOUT ALTERNATIVE TREATMENTS.—The fol-
lowing evidence, as available, with respect to such selected
drug and therapeutic alternatives to such drug:
‘‘(A) The extent to which such drug represents a thera-
peutic advance as compared to existing therapeutic alter-
natives and the costs of such existing therapeutic alter-
natives.
‘‘(B) Prescribing information approved by the Food and
Drug Administration for such drug and therapeutic alter-
natives to such drug.
‘‘(C) Comparative effectiveness of such drug and thera-
peutic alternatives to such drug, taking into consideration
the effects of such drug and therapeutic alternatives to
such drug on specific populations, such as individuals with
disabilities, the elderly, the terminally ill, children, and
other patient populations.
‘‘(D) The extent to which such drug and therapeutic
alternatives to such drug address unmet medical needs
for a condition for which treatment or diagnosis is not
addressed adequately by available therapy.
In using evidence described in subparagraph (C), the Secretary
shall not use evidence from comparative clinical effectiveness
research in a manner that treats extending the life of an
elderly, disabled, or terminally ill individual as of lower value
than extending the life of an individual who is younger, non-
disabled, or not terminally ill.
‘‘(f) RENEGOTIATION PROCESS.—
‘‘(1) IN GENERAL.—In the case of a renegotiation-eligible Effective date.
drug (as defined in paragraph (2)) that is selected under para-
graph (3), the Secretary shall provide for a process of renegoti-
ation (for years (beginning with 2028) during the price applica-
bility period, with respect to such drug) of the maximum fair
price for such drug consistent with paragraph (4).
‘‘(2) RENEGOTIATION-ELIGIBLE DRUG DEFINED.—In this sec-
tion, the term ‘renegotiation-eligible drug’ means a selected
drug that is any of the following:
‘‘(A) ADDITION OF NEW INDICATION.—A selected drug
for which a new indication is added to the drug.
‘‘(B) CHANGE OF STATUS TO AN EXTENDED-MONOPOLY
DRUG.—A selected drug that—
‘‘(i) is not an extended-monopoly or a long-
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monopoly drug; and
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136 STAT. 1848 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(ii) for which there is a change in status to that
of an extended-monopoly drug.
‘‘(C) CHANGE OF STATUS TO A LONG-MONOPOLY DRUG.—
A selected drug that—
‘‘(i) is not a long-monopoly drug; and
‘‘(ii) for which there is a change in status to that
of a long-monopoly drug.
Determination. ‘‘(D) MATERIAL CHANGES.—A selected drug for which
the Secretary determines there has been a material change
of any of the factors described in paragraph (1) or (2)
of subsection (e).
Effective date. ‘‘(3) SELECTION OF DRUGS FOR RENEGOTIATION.—For each
year (beginning with 2028), the Secretary shall select among
renegotiation-eligible drugs for renegotiation as follows:
‘‘(A) ALL EXTENDED-MONOPOLY NEGOTIATION-ELIGIBLE
DRUGS.—The Secretary shall select all renegotiation-eligible
drugs described in paragraph (2)(B).
‘‘(B) ALL LONG-MONOPOLY NEGOTIATION-ELIGIBLE
DRUGS.—The Secretary shall select all renegotiation-eligible
drugs described in paragraph (2)(C).
‘‘(C) REMAINING DRUGS.—Among the remaining renego-
tiation-eligible drugs described in subparagraphs (A) and
(D) of paragraph (2), the Secretary shall select renegoti-
ation-eligible drugs for which the Secretary expects renego-
tiation is likely to result in a significant change in the
maximum fair price otherwise negotiated.
‘‘(4) RENEGOTIATION PROCESS.—
‘‘(A) IN GENERAL.—The Secretary shall specify the
process for renegotiation of maximum fair prices with the
manufacturer of a renegotiation-eligible drug selected for
renegotiation under this subsection.
‘‘(B) CONSISTENT WITH NEGOTIATION PROCESS.—The
process specified under subparagraph (A) shall, to the
extent practicable, be consistent with the methodology and
process established under subsection (b) and in accordance
with subsections (c), (d), and (e), and for purposes of
applying subsections (c)(1)(A) and (d), the reference to the
first initial price applicability year of the price applicability
period with respect to such drug shall be treated as the
first initial price applicability year of such period for which
the maximum fair price established pursuant to such
renegotiation applies, including for applying subsection
(c)(3)(B) in the case of renegotiation-eligible drugs described
in paragraph (3)(A) of this subsection and subsection
(c)(3)(C) in the case of renegotiation-eligible drugs described
in paragraph (3)(B) of this subsection.
‘‘(5) CLARIFICATION.—A renegotiation-eligible drug for
which the Secretary makes a determination described in section
1192(c)(1) before or during the period of renegotiation shall
not be subject to the renegotiation process under this section.
Effective date. ‘‘(g) CLARIFICATION.—The maximum fair price for a selected
drug described in subparagraph (A) or (B) of paragraph (1) shall
take effect no later than the first day of the first calendar quarter
that begins after the date described in subparagraph (A) or (B),
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as applicable.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1849
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. Deadlines.
Time periods.
‘‘(a) IN GENERAL.—With respect to an initial price applicability 42 USC 1320f–4.
year and a selected drug with respect to such year—
‘‘(1) not later than November 30 of the year that is 2
years prior to such initial price applicability year, the Secretary
shall publish the maximum fair price for such drug negotiated
with the manufacturer of such drug under this part; and
‘‘(2) not later than March 1 of the year prior to such
initial price applicability year, the Secretary shall publish, sub-
ject to section 1193(c), the explanation for the maximum fair
price with respect to the factors as applied under section 1194(e)
for such drug described in paragraph (1).
‘‘(b) UPDATES.—
‘‘(1) SUBSEQUENT YEAR MAXIMUM FAIR PRICES.—For a
selected drug, for each year subsequent to the first initial
price applicability year of the price applicability period with
respect to such drug, with respect to which an agreement
for such drug is in effect under section 1193, not later than
November 30 of the year that is 2 years prior to such subse-
quent year, the Secretary shall publish the maximum fair price
applicable to such drug and year, which shall be—
‘‘(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban con-
sumers (all items; United States city average) for the 12-
month period ending with the July immediately preceding
such November 30; or
‘‘(B) in the case the maximum fair price for such drug
was renegotiated, for the first year for which such price
as so renegotiated applies, such renegotiated maximum
fair price.
‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.—In the case of Determination.
a selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under
this part after the date of publication under this section, the
Secretary shall publish such maximum fair price by not later
than 30 days after the date such maximum price is so deter-
mined.
‘‘SEC. 1196. ADMINISTRATIVE DUTIES AND COMPLIANCE MONITORING. 42 USC 1320f–5.
‘‘(a) ADMINISTRATIVE DUTIES.—For purposes of section
1191(a)(4), the administrative duties described in this section are
the following:
‘‘(1) The establishment of procedures to ensure that the
maximum fair price for a selected drug is applied before—
‘‘(A) any coverage or financial assistance under other
health benefit plans or programs that provide coverage
or financial assistance for the purchase or provision of
prescription drug coverage on behalf of maximum fair price
eligible individuals; and
‘‘(B) any other discounts.
‘‘(2) The establishment of procedures to compute and apply
the maximum fair price across different strengths and dosage
forms of a selected drug and not based on the specific formula-
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tion or package size or package type of such drug.
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136 STAT. 1850 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(3) The establishment of procedures to carry out the provi-
sions of this part, as applicable, with respect to—
‘‘(A) maximum fair price eligible individuals who are
enrolled in a prescription drug plan under part D of title
XVIII or an MA–PD plan under part C of such title; and
‘‘(B) maximum fair price eligible individuals who are
enrolled under part B of such title, including who are
enrolled in an MA plan under part C of such title.
‘‘(4) The establishment of a negotiation process and renego-
tiation process in accordance with section 1194.
‘‘(5) The establishment of a process for manufacturers to
submit information described in section 1194(b)(2)(A).
‘‘(6) The sharing with the Secretary of the Treasury of
such information as is necessary to determine the tax imposed
by section 5000D of the Internal Revenue Code of 1986,
including the application of such tax to a manufacturer, pro-
ducer, or importer or the determination of any date described
in section 5000D(c)(1) of such Code. For purposes of the pre-
ceding sentence, such information shall include—
‘‘(A) the date on which the Secretary receives notifica-
tion of any termination of an agreement under the Medicare
coverage gap discount program under section 1860D-14A
and the date on which any subsequent agreement under
such program is entered into;
‘‘(B) the date on which the Secretary receives notifica-
tion of any termination of an agreement under the manu-
facturer discount program under section 1860D-14C and
the date on which any subsequent agreement under such
program is entered into; and
‘‘(C) the date on which the Secretary receives notifica-
tion of any termination of a rebate agreement described
in section 1927(b) and the date on which any subsequent
rebate agreement described in such section is entered into.
‘‘(7) The establishment of procedures for purposes of
applying section 1192(d)(2)(B).
‘‘(b) COMPLIANCE MONITORING.—The Secretary shall monitor
compliance by a manufacturer with the terms of an agreement
under section 1193 and establish a mechanism through which viola-
tions of such terms shall be reported.
42 USC 1320f–6. ‘‘SEC. 1197. CIVIL MONETARY PENALTIES.
‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAXIMUM FAIR
PRICE.—Any manufacturer of a selected drug that has entered
into an agreement under section 1193, with respect to a year
during the price applicability period with respect to such drug,
that does not provide access to a price that is equal to or less
than the maximum fair price for such drug for such year—
‘‘(1) to a maximum fair price eligible individual who with
respect to such drug is described in subparagraph (A) of section
1191(c)(2) and who is dispensed such drug during such year
(and to pharmacies, mail order services, and other dispensers,
with respect to such maximum fair price eligible individuals
who are dispensed such drugs); or
‘‘(2) to a hospital, physician, or other provider of services
or supplier with respect to maximum fair price eligible individ-
uals who with respect to such drug is described in subparagraph
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(B) of such section and is furnished or administered such drug
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1851
by such hospital, physician, or provider or supplier during
such year;
shall be subject to a civil monetary penalty equal to ten times
the amount equal to the product of the number of units of such
drug so furnished, dispensed, or administered during such year
and the difference between the price for such drug made available
for such year by such manufacturer with respect to such individual
or hospital, physician, provider of services, or supplier and the
maximum fair price for such drug for such year.
‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREEMENT.—Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a year during the price applica-
bility period with respect to such drug, that is in violation of
a requirement imposed pursuant to section 1193(a)(5), including
the requirement to submit information pursuant to section
1193(a)(4), shall be subject to a civil monetary penalty equal to
$1,000,000 for each day of such violation.
‘‘(c) FALSE INFORMATION.—Any manufacturer that knowingly
provides false information pursuant to section 1196(a)(7) shall be
subject to a civil monetary penalty equal to $100,000,000 for each
item of such false information.
‘‘(d) APPLICATION.—The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty
under this section in the same manner as such provisions apply
to a penalty or proceeding under section 1128A(a).
‘‘SEC. 1198. LIMITATION ON ADMINISTRATIVE AND JUDICIAL REVIEW. 42 USC 1320f–7.
‘‘There shall be no administrative or judicial review of any
of the following:
‘‘(1) The determination of a unit, with respect to a drug
or biological product, pursuant to section 1191(c)(6).
‘‘(2) The selection of drugs under section 1192(b), the deter-
mination of negotiation-eligible drugs under section 1192(d),
and the determination of qualifying single source drugs under
section 1192(e).
‘‘(3) The determination of a maximum fair price under
subsection (b) or (f) of section 1194.
‘‘(4) The determination of renegotiation-eligible drugs under
section 1194(f)(2) and the selection of renegotiation-eligible
drugs under section 1194(f)(3).’’.
(b) APPLICATION OF MAXIMUM FAIR PRICES AND CONFORMING
AMENDMENTS.—
(1) UNDER MEDICARE.—
(A) APPLICATION TO PAYMENTS UNDER PART B.—Section
1847A(b)(1)(B) of the Social Security Act (42 U.S.C. 1395w–
3a(b)(1)(B)) is amended by inserting ‘‘or in the case of
such a drug or biological product that is a selected drug
(as referred to in section 1192(c)), with respect to a price
applicability period (as defined in section 1191(b)(2)), 106
percent of the maximum fair price (as defined in section
1191(c)(3)) applicable for such drug and a year during
such period’’ after ‘‘paragraph (4)’’.
(B) APPLICATION UNDER MA OF COST-SHARING FOR PART
B DRUGS BASED OFF OF NEGOTIATED PRICE.—Section
1852(a)(1)(B)(iv) of the Social Security Act (42 U.S.C.
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1395w–22(a)(1)(B)(iv)) is amended—
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136 STAT. 1852 PUBLIC LAW 117–169—AUG. 16, 2022
(i) by redesignating subclause (VII) as subclause
(VIII); and
(ii) by inserting after subclause (VI) the following
subclause:
‘‘(VII) A drug or biological product that is a
selected drug (as referred to in section 1192(c)).’’.
(C) EXCEPTION TO PART D NON-INTERFERENCE.—Section
1860D–11(i) of the Social Security Act (42 U.S.C. 1395w–
111(i)) is amended—
(i) in paragraph (1), by striking ‘‘and’’ at the end;
(ii) in paragraph (2), by striking ‘‘or institute a
price structure for the reimbursement of covered part
D drugs.’’ and inserting ‘‘, except as provided under
section 1860D–4(b)(3)(l); and’’; and
(iii) by adding at the end the following new para-
graph:
‘‘(3) may not institute a price structure for the reimburse-
ment of covered part D drugs, except as provided under part
E of title XI.’’.
(D) APPLICATION AS NEGOTIATED PRICE UNDER PART
D.—Section 1860D–2(d)(1) of the Social Security Act (42
U.S.C. 1395w–102(d)(1)) is amended—
(i) in subparagraph (B), by inserting ‘‘, subject
to subparagraph (D),’’ after ‘‘negotiated prices’’; and
(ii) by adding at the end the following new
subparagraph:
‘‘(D) APPLICATION OF MAXIMUM FAIR PRICE FOR
SELECTED DRUGS.—In applying this section, in the case
of a covered part D drug that is a selected drug (as referred
to in section 1192(c)), with respect to a price applicability
period (as defined in section 1191(b)(2)), the negotiated
prices used for payment (as described in this subsection)
shall be no greater than the maximum fair price (as defined
in section 1191(c)(3)) for such drug and for each year during
such period plus any dispensing fees for such drug.’’.
(E) COVERAGE OF SELECTED DRUGS.—Section 1860D–
4(b)(3) of the Social Security Act (42 U.S.C. 1395w–
104(b)(3)) is amended by adding at the end the following
new subparagraph:
‘‘(I) REQUIRED INCLUSION OF SELECTED DRUGS.—
Time periods. ‘‘(i) IN GENERAL.—For 2026 and each subsequent
year, the PDP sponsor offering a prescription drug
plan shall include each covered part D drug that is
a selected drug under section 1192 for which a max-
imum fair price (as defined in section 1191(c)(3)) is
in effect with respect to the year.
‘‘(ii) CLARIFICATION.—Nothing in clause (i) shall
be construed as prohibiting a PDP sponsor from
removing such a selected drug from a formulary if
such removal would be permitted under section
423.120(b)(5)(iv) of title 42, Code of Federal Regula-
tions (or any successor regulation).’’.
(F) INFORMATION FROM PRESCRIPTION DRUG PLANS AND
MA–PD PLANS REQUIRED.—
(i) PRESCRIPTION DRUG PLANS.—Section 1860D–
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12(b) of the Social Security Act (42 U.S.C. 1395w–
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1853
112(b)) is amended by adding at the end the following
new paragraph:
‘‘(8) PROVISION OF INFORMATION RELATED TO MAXIMUM FAIR
PRICES.—Each contract entered into with a PDP sponsor under Contracts.
this part with respect to a prescription drug plan offered by Requirement.
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary for purposes
of carrying out section 1194.’’.
(ii) MA–PD PLANS.—Section 1857(f)(3) of the Social
Security Act (42 U.S.C. 1395w–27(f)(3)) is amended
by adding at the end the following new subparagraph:
‘‘(E) PROVISION OF INFORMATION RELATED TO MAXIMUM
FAIR PRICES.—Section 1860D–12(b)(8).’’.
(G) CONDITIONS FOR COVERAGE.—
(i) MEDICARE PART D.—Section 1860D–43(c) of the
Social Security Act (42 U.S.C. 1395w–153(c)) is
amended—
(I) by redesignating paragraphs (1) and (2)
as subparagraphs (A) and (B), respectively;
(II) by striking ‘‘AGREEMENTS.—Subsection’’
and inserting the following: ‘‘AGREEMENTS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection’’;
and
(III) by adding at the end the following new
paragraph:
‘‘(2) EXCEPTION.—Paragraph (1)(A) shall not apply to a
covered part D drug of a manufacturer for any period described
in section 5000D(c)(1) of the Internal Revenue Code of 1986
with respect to the manufacturer.’’.
(ii) MEDICAID AND MEDICARE PART B.—Section
1927(a)(3) of the Social Security Act (42 U.S.C. 1396r–
8(a)(3)) is amended by adding at the end the following
new sentence: ‘‘The preceding sentence shall not apply
to a single source drug or innovator multiple source
drug of a manufacturer for any period described in
section 5000D(c)(1) of the Internal Revenue Code of
1986 with respect to the manufacturer.’’.
(H) DISCLOSURE OF INFORMATION UNDER MEDICARE
PART D.—
(i) CONTRACT REQUIREMENTS.—Section 1860D–
12(b)(3)(D)(i) of the Social Security Act (42 U.S.C.
1395w–112(b)(3)(D)(i)) is amended by inserting ‘‘, or
carrying out part E of title XI’’ after ‘‘appropriate)’’.
(ii) SUBSIDIES.—Section 1860D–15(f)(2)(A)(i) of the
Social Security Act (42 U.S.C. 1395w–115(f)(2)(A)(i))
is amended by inserting ‘‘or part E of title XI’’ after
‘‘this section’’.
(2) DRUG PRICE NEGOTIATION PROGRAM PRICES INCLUDED
IN BEST PRICE.—Section 1927(c)(1)(C) of the Social Security
Act (42 U.S.C. 1396r–8(c)(1)(C)) is amended—
(A) in clause (i)(VI), by striking ‘‘any prices charged’’
and inserting ‘‘subject to clause (ii)(V), any prices charged’’;
and
(B) in clause (ii)—
(i) in subclause (III), by striking ‘‘; and’’ at the
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136 STAT. 1854 PUBLIC LAW 117–169—AUG. 16, 2022
(ii) in subclause (IV), by striking the period at
the end and inserting ‘‘; and’’; and
(iii) by adding at the end the following new sub-
clause:
‘‘(V) in the case of a rebate period and a cov-
ered outpatient drug that is a selected drug (as
referred to in section 1192(c)) during such rebate
period, shall be inclusive of the maximum fair
price (as defined in section 1191(c)(3)) for such
drug with respect to such period.’’.
(3) MAXIMUM FAIR PRICES EXCLUDED FROM AVERAGE MANU-
FACTURER PRICE.—Section 1927(k)(1)(B)(i) of the Social Security
Act (42 U.S.C. 1396r–8(k)(1)(B)(i)) is amended—
(A) in subclause (IV) by striking ‘‘; and’’ at the end;
(B) in subclause (V) by striking the period at the end
and inserting ‘‘; and’’; and
(C) by adding at the end the following new subclause:
‘‘(VI) any reduction in price paid during the
rebate period to the manufacturer for a drug by
reason of application of part E of title XI.’’.
42 USC 1320f (c) IMPLEMENTATION FOR 2026 THROUGH 2028.—The Secretary
note. of Health and Human Services shall implement this section,
including the amendments made by this section, for 2026, 2027,
and 2028 by program instruction or other forms of program guid-
ance.
SEC. 11002. SPECIAL RULE TO DELAY SELECTION AND NEGOTIATION
OF BIOLOGICS FOR BIOSIMILAR MARKET ENTRY.
(a) IN GENERAL.—Part E of title XI of the Social Security
Act, as added by section 11001, is amended—
42 USC 1320f–1. (1) in section 1192—
(A) in subsection (a), in the flush matter following
paragraph (4), by inserting ‘‘and subsection (b)(3)’’ after
‘‘the previous sentence’’;
(B) in subsection (b)—
(i) in paragraph (1), by adding at the end the
following new subparagraph:
‘‘(C) In the case of a biological product for which the
inclusion of the biological product as a selected drug on
a list published under subsection (a) has been delayed
under subsection (f)(2), remove such biological product from
the rankings under subparagraph (A) before making the
selections under subparagraph (B).’’; and
(ii) by adding at the end the following new para-
graph:
‘‘(3) INCLUSION OF DELAYED BIOLOGICAL PRODUCTS.—Pursu-
ant to subparagraphs (B)(ii)(I) and (C)(i) of subsection (f)(2),
the Secretary shall select and include on the list published
under subsection (a) the biological products described in such
subparagraphs. Such biological products shall count towards
the required number of drugs to be selected under subsection
(a)(1).’’; and
(C) by adding at the end the following new subsection:
‘‘(f) SPECIAL RULE TO DELAY SELECTION AND NEGOTIATION OF
BIOLOGICS FOR BIOSIMILAR MARKET ENTRY.—
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‘‘(1) APPLICATION.—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1855
‘‘(A) IN GENERAL.—Subject to subparagraph (B), in the Determination.
case of a biological product that would (but for this sub- Time period.
section) be an extended-monopoly drug (as defined in sec-
tion 1194(c)(4)) included as a selected drug on the list
published under subsection (a) with respect to an initial
price applicability year, the rules described in paragraph
(2) shall apply if the Secretary determines that there is
a high likelihood (as described in paragraph (3)) that a
biosimilar biological product (for which such biological
product will be the reference product) will be licensed and
marketed under section 351(k) of the Public Health Service
Act before the date that is 2 years after the selected drug
publication date with respect to such initial price applica-
bility year.
‘‘(B) REQUEST REQUIRED.—
‘‘(i) IN GENERAL.—The Secretary shall not provide
for a delay under—
‘‘(I) paragraph (2)(A) unless a request is made
for such a delay by a manufacturer of a biosimilar
biological product prior to the selected drug
publication date for the list published under sub-
section (a) with respect to the initial price applica-
bility year for which the biological product may
have been included as a selected drug on such
list but for subparagraph (2)(A); or
‘‘(II) paragraph (2)(B)(iii) unless a request is Time period.
made for such a delay by such a manufacturer
prior to the selected drug publication date for the
list published under subsection (a) with respect
to the initial price applicability year that is 1
year after the initial price applicability year for
which the biological product described in sub-
section (a) would have been included as a selected
drug on such list but for paragraph (2)(A).
‘‘(ii) INFORMATION AND DOCUMENTS.—
‘‘(I) IN GENERAL.—A request made under
clause (i) shall be submitted to the Secretary by
such manufacturer at a time and in a form and
manner specified by the Secretary, and contain—
‘‘(aa) information and documents nec-
essary for the Secretary to make determina-
tions under this subsection, as specified by
the Secretary and including, to the extent
available, items described in subclause (III);
and
‘‘(bb) all agreements related to the bio-
similar biological product filed with the Fed-
eral Trade Commission or the Assistant
Attorney General pursuant to subsections (a)
and (c) of section 1112 of the Medicare
Prescription Drug, Improvement, and Mod-
ernization Act of 2003.
‘‘(II) ADDITIONAL INFORMATION AND DOCU-
MENTS.—After the Secretary has reviewed the
request and materials submitted under subclause
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(I), the manufacturer shall submit any additional
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136 STAT. 1856 PUBLIC LAW 117–169—AUG. 16, 2022
information and documents requested by the Sec-
retary necessary to make determinations under
this subsection.
‘‘(III) ITEMS DESCRIBED.—The items described
in this clause are the following:
‘‘(aa) The manufacturing schedule for such
biosimilar biological product submitted to the
Food and Drug Administration during its
review of the application under such section
351(k).
Time period. ‘‘(bb) Disclosures (in filings by the manu-
facturer of such biosimilar biological product
with the Securities and Exchange Commission
required under section 12(b), 12(g), 13(a), or
15(d) of the Securities Exchange Act of 1934
about capital investment, revenue expecta-
tions, and actions taken by the manufacturer
that are typical of the normal course of busi-
ness in the year (or the 2 years, as applicable)
before marketing of a biosimilar biological
product) that pertain to the marketing of such
biosimilar biological product, or comparable
documentation that is distributed to the share-
holders of privately held companies.
‘‘(C) AGGREGATION RULE.—
‘‘(i) IN GENERAL.—All persons treated as a single
employer under subsection (a) or (b) of section 52 of
the Internal Revenue Code of 1986, or in a partnership,
shall be treated as one manufacturer for purposes of
paragraph (2)(D)(iv).
‘‘(ii) PARTNERSHIP DEFINED.—In clause (i), the term
‘partnership’ means a syndicate, group, pool, joint ven-
ture, or other organization through or by means of
which any business, financial operation, or venture
is carried on by the manufacturer of the biological
product and the manufacturer of the biosimilar
biological product.
Time periods. ‘‘(2) RULES DESCRIBED.—The rules described in this para-
Determination. graph are the following:
‘‘(A) DELAYED SELECTION AND NEGOTIATION FOR 1
YEAR.—If a determination of high likelihood is made under
paragraph (3), the Secretary shall delay the inclusion of
the biological product as a selected drug on the list pub-
lished under subsection (a) until such list is published
with respect to the initial price applicability year that
is 1 year after the initial price applicability year for which
the biological product would have been included as a
selected drug on such list.
‘‘(B) IF NOT LICENSED AND MARKETED DURING THE INI-
TIAL DELAY.—
‘‘(i) IN GENERAL.—If, during the time period
between the selected drug publication date on which
the biological product would have been included on
the list as a selected drug pursuant to subsection (a)
but for subparagraph (A) and the selected drug publica-
tion date with respect to the initial price applicability
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year that is 1 year after the initial price applicability
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1857
year for which such biological product would have been
included as a selected drug on such list, the Secretary
determines that the biosimilar biological product for
which the manufacturer submitted the request under
paragraph (1)(B)(i)(II) (and for which the Secretary
previously made a high likelihood determination under
paragraph (3)) has not been licensed and marketed
under section 351(k) of the Public Health Service Act,
the Secretary shall, at the request of such manufac-
turer—
‘‘(I) reevaluate whether there is a high likeli-
hood (as described in paragraph (3)) that such
biosimilar biological product will be licensed and
marketed under such section 351(k) before the date
that is 2 years after the selected drug publication
date for which such biological product would have
been included as a selected drug on such list pub-
lished but for subparagraph (A); and
‘‘(II) evaluate whether, on the basis of clear Evaluation.
and convincing evidence, the manufacturer of such
biosimilar biological product has made a significant
amount of progress (as determined by the Sec-
retary) towards both such licensure and the mar-
keting of such biosimilar biological product (based
on information from items described in subclauses
(I)(bb) and (II) of paragraph (1)(B)(ii)) since the
receipt by the Secretary of the request made by
such manufacturer under paragraph (1)(B)(i)(I).
‘‘(ii) SELECTION AND NEGOTIATION.—If the Sec-
retary determines that there is not a high likelihood
that such biosimilar biological product will be licensed
and marketed as described in clause (i)(I) or there
has not been a significant amount of progress as
described in clause (i)(II)—
‘‘(I) the Secretary shall include the biological
product as a selected drug on the list published
under subsection (a) with respect to the initial
price applicability year that is 1 year after the
initial price applicability year for which such
biological product would have been included as
a selected drug on such list but for subparagraph
(A); and
‘‘(II) the manufacturer of such biological
product shall pay a rebate under paragraph (4)
with respect to the year for which such manufac-
turer would have provided access to a maximum
fair price for such biological product but for
subparagraph (A).
‘‘(iii) SECOND 1-YEAR DELAY.—If the Secretary
determines that there is a high likelihood that such
biosimilar biological product will be licensed and mar-
keted (as described in clause (i)(I)) and a significant
amount of progress has been made by the manufacturer
of such biosimilar biological product towards such licen-
sure and marketing (as described in clause (i)(II)),
the Secretary shall delay the inclusion of the biological
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product as a selected drug on the list published under
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136 STAT. 1858 PUBLIC LAW 117–169—AUG. 16, 2022
subsection (a) until the selected drug publication date
of such list with respect to the initial price applicability
year that is 2 years after the initial price applicability
year for which such biological product would have been
included as a selected drug on such list but for this
subsection.
‘‘(C) IF NOT LICENSED AND MARKETED DURING THE YEAR
TWO DELAY.—If, during the time period between the
selected drug publication date of the list for which the
biological product would have been included as a selected
drug but for subparagraph (B)(iii) and the selected drug
publication date with respect to the initial price applica-
bility year that is 2 years after the initial price applicability
year for which such biological product would have been
included as a selected drug on such list but for this sub-
section, the Secretary determines that such biosimilar
biological product has not been licensed and marketed—
‘‘(i) the Secretary shall include such biological
product as a selected drug on such list with respect
to the initial price applicability year that is 2 years
after the initial price applicability year for which such
biological product would have been included as a
selected drug on such list; and
‘‘(ii) the manufacturer of such biological product
shall pay a rebate under paragraph (4) with respect
to the years for which such manufacturer would have
provided access to a maximum fair price for such
biological product but for this subsection.
‘‘(D) LIMITATIONS ON DELAYS.—
‘‘(i) LIMITED TO 2 YEARS.—In no case shall the
Secretary delay the inclusion of a biological product
on the list published under subsection (a) for more
than 2 years.
‘‘(ii) EXCLUSION OF BIOLOGICAL PRODUCTS THAT
TRANSITIONED TO A LONG-MONOPOLY DRUG DURING THE
DELAY.—In the case of a biological product for which
the inclusion on the list published pursuant to sub-
section (a) was delayed by 1 year under subparagraph
(A) and for which there would have been a change
in status to a long-monopoly drug (as defined in section
1194(c)(5)) if such biological product had been a
selected drug, in no case may the Secretary provide
for a second 1-year delay under subparagraph (B)(iii).
‘‘(iii) EXCLUSION OF BIOLOGICAL PRODUCTS IF MORE
THAN 1 YEAR SINCE LICENSURE.—In no case shall the
Secretary delay the inclusion of a biological product
on the list published under subsection (a) if more than
1 year has elapsed since the biosimilar biological
product has been licensed under section 351(k) of the
Public Health Service Act and marketing has not com-
menced for such biosimilar biological product.
‘‘(iv) CERTAIN MANUFACTURERS OF BIOSIMILAR
BIOLOGICAL PRODUCTS EXCLUDED.—In no case shall the
Secretary delay the inclusion of a biological product
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1859
as a selected drug on the list published under sub-
section (a) if Secretary determined that the manufac-
turer of the biosimilar biological product described in
paragraph (1)(A)—
‘‘(I) is the same as the manufacturer of the
reference product described in such paragraph or
is treated as being the same pursuant to paragraph
(1)(C); or
‘‘(II) has, based on information from items
described in paragraph (1)(B)(ii)(I)(bb), entered
into any agreement described in such paragraph
with the manufacturer of the reference product
described in paragraph (1)(A) that—
‘‘(aa) requires or incentivizes the manufac-
turer of the biosimilar biological product to
submit a request described in paragraph
(1)(B); or
‘‘(bb) restricts the quantity (either directly
or indirectly) of the biosimilar biological
product that may be sold in the United States
over a specified period of time.
‘‘(3) HIGH LIKELIHOOD.—For purposes of this subsection,
there is a high likelihood described in paragraph (1) or para-
graph (2), as applicable, if the Secretary finds that—
‘‘(A) an application for licensure under section 351(k)
of the Public Health Service Act for the biosimilar biological
product has been accepted for review or approved by the
Food and Drug Administration; and
‘‘(B) information from items described in sub clauses
(I)(bb) and (III) of paragraph (1)(B)(ii) submitted to the
Secretary by the manufacturer requesting a delay under
such paragraph provides clear and convincing evidence that
such biosimilar biological product will, within the time
period specified under paragraph (1)(A) or (2)(B)(i)(I), be
marketed.
‘‘(4) REBATE.—
‘‘(A) IN GENERAL.—For purposes of subparagraphs
(B)(ii)(II) and (C)(ii) of paragraph (2), in the case of a
biological product for which the inclusion on the list under
subsection (a) was delayed under this subsection and for
which the Secretary has negotiated and entered into an
agreement under section 1193 with respect to such
biological product, the manufacturer shall be required to
pay a rebate to the Secretary at such time and in such
manner as determined by the Secretary.
‘‘(B) AMOUNT.—Subject to subparagraph (C), the Estimate.
amount of the rebate under subparagraph (A) with respect
to a biological product shall be equal to the estimated
amount—
‘‘(i) in the case of a biological product that is a
covered part D drug (as defined in section 1860D–
2(e)), that is the sum of the products of—
‘‘(I) 75 percent of the amount by which—
‘‘(aa) the average manufacturer price, as
reported by the manufacturer of such covered
part D drug under section 1927 (or, if not
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reported by such manufacturer under section
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136 STAT. 1860 PUBLIC LAW 117–169—AUG. 16, 2022
1927, as reported by such manufacturer to
the Secretary pursuant to the agreement
under section 1193(a)) for such biological
product, with respect to each of the calendar
quarters of the price applicability period that
would have applied but for this subsection;
exceeds
‘‘(bb) in the initial price applicability year
that would have applied but for a delay
under—
‘‘(AA) paragraph (2)(A), the maximum
fair price negotiated under section 1194
for such biological product under such
agreement; or
‘‘(BB) paragraph (2)(B)(iii), such max-
imum fair price, increased as described
in section 1195(b)(1)(A); and
‘‘(II) the number of units dispensed under part
D of title XVIII for such covered part D drug
during each such calendar quarter of such price
applicability period; and
‘‘(ii) in the case of a biological product for which
payment may be made under part B of title XVIII,
that is the sum of the products of—
‘‘(I) 80 percent of the amount by which—
‘‘(aa) the payment amount for such
biological product under section 1847A(b), with
respect to each of the calendar quarters of
the price applicability period that would have
applied but for this subsection; exceeds
‘‘(bb) in the initial price applicability year
that would have applied but for a delay
under—
‘‘(AA) paragraph (2)(A), the maximum
fair price negotiated under section 1194
for such biological product under such
agreement; or
‘‘(BB) paragraph (2)(B)(iii), such max-
imum fair price, increased as described
in section 1195(b)(1)(A); and
‘‘(II) the number of units (excluding units that
are packaged into the payment amount for an
item or service and are not separately payable
under such part B) of the billing and payment
code of such biological product administered or
furnished under such part B during each such
calendar quarter of such price applicability period.
‘‘(C) SPECIAL RULE FOR DELAYED BIOLOGICAL PRODUCTS
THAT ARE LONG-MONOPOLY DRUGS.—
Determination. ‘‘(i) IN GENERAL.—In the case of a biological product
with respect to which a rebate is required to be paid
under this paragraph, if such biological product quali-
fies as a long-monopoly drug (as defined in section
1194(c)(5)) at the time of its inclusion on the list pub-
lished under subsection (a), in determining the amount
of the rebate for such biological product under subpara-
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graph (B), the amount described in clause (ii) shall
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1861
be substituted for the maximum fair price described
in clause (i)(I) or (ii)(I) of such subparagraph (B), as
applicable.
‘‘(ii) AMOUNT DESCRIBED.—The amount described Time periods.
in this clause is an amount equal to 65 percent of
the average non-Federal average manufacturer price
for the biological product for 2021 (or, in the case
that there is not an average non-Federal average
manufacturer price available for such biological
product for 2021, for the first full year following the
market entry for such biological product), increased
by the percentage increase in the consumer price index
for all urban consumers (all items; United States city
average) from September 2021 (or December of such
first full year following the market entry), as
applicable, to September of the year prior to the
selected drug publication date with respect to the ini-
tial price applicability year that would have applied
but for this subsection.
‘‘(D) REBATE DEPOSITS.—Amounts paid as rebates
under this paragraph shall be deposited into—
‘‘(i) in the case payment is made for such biological
product under part B of title XVIII, the Federal Supple-
mentary Medical Insurance Trust Fund established
under section 1841; and
‘‘(ii) in the case such biological product is a covered
part D drug (as defined in section 1860D–2(e)), the
Medicare Prescription Drug Account under section
1860D–16 in such Trust Fund.
‘‘(5) DEFINITIONS OF BIOSIMILAR BIOLOGICAL PRODUCT.—In
this subsection, the term ‘biosimilar biological product’ has
the meaning given such term in section 1847A(c)(6).’’;
(2) in section 1193(a)(4)— 42 USC 1320f–2.
(A) in the matter preceding subparagraph (A), by
inserting ‘‘, and for section 1192(f),’’ after ‘‘section 1194(f))’’;
(B) in subparagraph (A), by striking ‘‘and’’ at the end;
(C) by adding at the end the following new subpara-
graph:
‘‘(C) information that the Secretary requires to carry
out section 1192(f), including rebates under paragraph (4)
of such section; and’’;
(3) in section 1196(a)(7), by striking ‘‘section 1192(d)(2)(B)’’ 42 USC 1320f–5.
and inserting ‘‘subsections (d)(2)(B) and (f)(1)(C) of section
1192’’;
(4) in section 1197— 42 USC 1320f–6.
(A) by redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively; and
(B) by inserting after subsection (a) the following new
subsection:
‘‘(b) VIOLATIONS RELATING TO PROVIDING REBATES.—Any manu- Penalties.
facturer that fails to comply with the rebate requirements under
section 1192(f)(4) shall be subject to a civil monetary penalty equal
to 10 times the amount of the rebate the manufacturer failed
to pay under such section.’’; and
(5) in section 1198(b)(2), by inserting ‘‘the application of 42 USC 1320f–7.
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section 1192(f),’’ after ‘‘section 1192(e)’’.
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136 STAT. 1862 PUBLIC LAW 117–169—AUG. 16, 2022
(b) CONFORMING AMENDMENTS FOR DISCLOSURE OF CERTAIN
INFORMATION.—Section 1927(b)(3)(D)(i) of the Social Security Act
(42 U.S.C. 1396r–8(b)(3)(D)(i)) is amended by striking ‘‘or to carry
out section 1847B’’ and inserting ‘‘or to carry out section 1847B
or section 1192(f), including rebates under paragraph (4) of such
section’’.
42 USC 1320f–1 (c) IMPLEMENTATION FOR 2026 THROUGH 2028.—The Secretary
note. of Health and Human Services shall implement this section,
including the amendments made by this section, for 2026, 2027,
and 2028 by program instruction or other forms of program guid-
ance.
SEC. 11003. EXCISE TAX IMPOSED ON DRUG MANUFACTURERS DURING
NONCOMPLIANCE PERIODS.
(a) IN GENERAL.—Subtitle D of the Internal Revenue Code
of 1986 is amended by adding at the end the following new chapter:
26 USC 5000D ‘‘CHAPTER 50A—DESIGNATED DRUGS
prec. ‘‘Sec. 5000D. Designated drugs during noncompliance periods.
26 USC 5000D. ‘‘SEC. 5000D. DESIGNATED DRUGS DURING NONCOMPLIANCE PERIODS.
‘‘(a) IN GENERAL.—There is hereby imposed on the sale by
the manufacturer, producer, or importer of any designated drug
during a day described in subsection (b) a tax in an amount such
that the applicable percentage is equal to the ratio of—
‘‘(1) such tax, divided by
‘‘(2) the sum of such tax and the price for which so sold.
‘‘(b) NONCOMPLIANCE PERIODS.—A day is described in this sub-
section with respect to a designated drug if it is a day during
one of the following periods:
‘‘(1) The period beginning on the March 1st (or, in the
case of initial price applicability year 2026, the October 2nd)
immediately following the date on which such drug is included
on the list published under section 1192(a) of the Social Security
Act and ending on the earlier of—
‘‘(A) the first date on which the manufacturer of such
designated drug has in place an agreement described in
section 1193(a) of such Act with respect to such drug,
or
‘‘(B) the date that the Secretary of Health and Human
Services has made a determination described in section
1192(c)(1) of such Act with respect to such designated drug.
‘‘(2) The period beginning on the November 2nd imme-
diately following the March 1st described in paragraph (1)
(or, in the case of initial price applicability year 2026, the
August 2nd immediately following the October 2nd described
in such paragraph) and ending on the earlier of—
‘‘(A) the first date on which the manufacturer of such
designated drug and the Secretary of Health and Human
Services have agreed to a maximum fair price under an
agreement described in section 1193(a) of the Social Secu-
rity Act, or
‘‘(B) the date that the Secretary of Health and Human
Services has made a determination described in section
1192(c)(1) of such Act with respect to such designated drug.
‘‘(3) In the case of any designated drug which is a selected
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drug (as defined in section 1192(c) of the Social Security Act)
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1863
that the Secretary of Health and Human Services has selected
for renegotiation under section 1194(f) of such Act, the period
beginning on the November 2nd of the year that begins 2
years prior to the first initial price applicability year of the
price applicability period for which the maximum fair price
established pursuant to such renegotiation applies and ending
on the earlier of—
‘‘(A) the first date on which the manufacturer of such
designated drug has agreed to a renegotiated maximum
fair price under such agreement, or
‘‘(B) the date that the Secretary of Health and Human
Services has made a determination described in section
1192(c)(1) of such Act with respect to such designated drug.
‘‘(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services
under an agreement described in section 1193(a) of the Social
Security Act, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
‘‘(c) SUSPENSION OF TAX.— Contracts.
‘‘(1) IN GENERAL.—A day shall not be taken into account
as a day during a period described in subsection (b) if such
day is also a day during the period—
‘‘(A) beginning on the first date on which—
‘‘(i) the notice of terminations of all applicable Notice.
agreements of the manufacturer have been received
by the Secretary of Health and Human Services, and
‘‘(ii) none of the drugs of the manufacturer of the
designated drug are covered by an agreement under
section 1860D-14A or 1860D-14C of the Social Security
Act, and
‘‘(B) ending on the last day of February following the
earlier of—
‘‘(i) the first day after the date described in
subparagraph (A) on which the manufacturer enters
into any subsequent applicable agreement, or
‘‘(ii) the first date any drug of the manufacturer
of the designated drug is covered by an agreement
under section 1860D-14A or 1860D-14C of the Social
Security Act.
‘‘(2) APPLICABLE AGREEMENT.—For purposes of this sub- Definition.
section, the term ‘applicable agreement’ means the following:
‘‘(A) An agreement under—
‘‘(i) the Medicare coverage gap discount program
under section 1860D-14A of the Social Security Act,
or
‘‘(ii) the manufacturer discount program under sec-
tion 1860D-14C of such Act.
‘‘(B) A rebate agreement described in section 1927(b)
of such Act.
‘‘(d) APPLICABLE PERCENTAGE.—For purposes of this section, Definition.
the term ‘applicable percentage’ means—
‘‘(1) in the case of sales of a designated drug during the
first 90 days described in subsection (b) with respect to such
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drug, 65 percent,
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136 STAT. 1864 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(2) in the case of sales of such drug during the 91st
day through the 180th day described in subsection (b) with
respect to such drug, 75 percent,
‘‘(3) in the case of sales of such drug during the 181st
day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
‘‘(4) in the case of sales of such drug during any subsequent
day, 95 percent.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) DESIGNATED DRUG.—The term ‘designated drug’ means
any negotiation-eligible drug (as defined in section 1192(d) of
the Social Security Act) included on the list published under
section 1192(a) of such Act which is manufactured or produced
in the United States or entered into the United States for
consumption, use, or warehousing.
‘‘(2) UNITED STATES.—The term ‘United States’ has the
meaning given such term by section 4612(a)(4).
‘‘(3) OTHER TERMS.—The terms ‘initial price applicability
year’, ‘price applicability period’, and ‘maximum fair price’ have
the meaning given such terms in section 1191 of the Social
Security Act.
‘‘(f) SPECIAL RULES.—
Applicability. ‘‘(1) COORDINATION WITH RULES FOR POSSESSIONS OF THE
UNITED STATES.—Rules similar to the rules of paragraphs (2)
and (4) of section 4132(c) shall apply for purposes of this section.
‘‘(2) ANTI-ABUSE RULE.—In the case of a sale which was
timed for the purpose of avoiding the tax imposed by this
section, the Secretary may treat such sale as occurring during
a day described in subsection (b).
Applicability. ‘‘(g) EXPORTS.—Rules similar to the rules of section 4662(e)
(other than section 4662(e)(2)(A)(ii)(II)) shall apply for purposes
of this chapter.
Guidelines. ‘‘(h) REGULATIONS.—The Secretary shall prescribe such regula-
tions and other guidance as may be necessary to carry out this
section.’’.
(b) NO DEDUCTION FOR EXCISE TAX PAYMENTS.—Section
26 USC 275. 275(a)(6) of the Internal Revenue Code of 1986 is amended by
inserting ‘‘50A,’’ after ‘‘46,’’.
(c) CLERICAL AMENDMENT.—The table of chapters for subtitle
26 USC 4001 D of the Internal Revenue Code of 1986 is amended by adding
prec. at the end the following new item:
‘‘CHAPTER 50A—DESIGNATED DRUGS’’.
26 USC 5000D (d) EFFECTIVE DATE.—The amendments made by this section
note. shall apply to sales after the date of the enactment of this Act.
SEC. 11004. FUNDING.
In addition to amounts otherwise available, there is appro-
priated to the Centers for Medicare & Medicaid Services, out of
any money in the Treasury not otherwise appropriated,
$3,000,000,000 for fiscal year 2022, to remain available until
expended, to carry out the provisions of, including the amendments
made by, this part.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1865
PART 2—PRESCRIPTION DRUG INFLATION
REBATES
SEC. 11101. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) IN GENERAL.—Section 1847A of the Social Security Act
(42 U.S.C. 1395w–3a) is amended by redesignating subsection (i)
as subsection (j) and by inserting after subsection (h) the following
subsection:
‘‘(i) REBATE BY MANUFACTURERS FOR SINGLE SOURCE DRUGS
AND BIOLOGICALS WITH PRICES INCREASING FASTER THAN INFLA-
TION.—
‘‘(1) REQUIREMENTS.— Deadlines.
‘‘(A) SECRETARIAL PROVISION OF INFORMATION.—Not Effective dates.
Time periods.
later than 6 months after the end of each calendar quarter Reports.
beginning on or after January 1, 2023, the Secretary shall,
for each part B rebatable drug, report to each manufacturer
of such part B rebatable drug the following for such cal-
endar quarter:
‘‘(i) Information on the total number of units of
the billing and payment code described in subpara-
graph (A)(i) of paragraph (3) with respect to such drug
and calendar quarter.
‘‘(ii) Information on the amount (if any) of the
excess average sales price increase described in
subparagraph (A)(ii) of such paragraph for such drug
and calendar quarter.
‘‘(iii) The rebate amount specified under such para-
graph for such part B rebatable drug and calendar
quarter.
‘‘(B) MANUFACTURER REQUIREMENT.—For each calendar
quarter beginning on or after January 1, 2023, the manu-
facturer of a part B rebatable drug shall, for such drug,
not later than 30 days after the date of receipt from the
Secretary of the information described in subparagraph
(A) for such calendar quarter, provide to the Secretary
a rebate that is equal to the amount specified in paragraph
(3) for such drug for such calendar quarter.
‘‘(C) TRANSITION RULE FOR REPORTING.—The Secretary
may, for each part B rebatable drug, delay the timeframe
for reporting the information described in subparagraph
(A) for calendar quarters beginning in 2023 and 2024 until
not later than September 30, 2025.
‘‘(2) PART B REBATABLE DRUG DEFINED.—
‘‘(A) IN GENERAL.—In this subsection, the term ‘part
B rebatable drug’ means a single source drug or biological
(as defined in subparagraph (D) of subsection (c)(6)),
including a biosimilar biological product (as defined in
subparagraph (H) of such subsection) but excluding a quali-
fying biosimilar biological product (as defined in subsection
(b)(8)(B)(iii)), for which payment is made under this part,
except such term shall not include such a drug or
biological—
‘‘(i) if, as determined by the Secretary, the average Determination.
total allowed charges for such drug or biological under
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this part for a year per individual that uses such
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136 STAT. 1866 PUBLIC LAW 117–169—AUG. 16, 2022
a drug or biological are less than, subject to subpara-
graph (B), $100; or
‘‘(ii) that is a vaccine described in subparagraph
(A) or (B) of section 1861(s)(10).
Time periods. ‘‘(B) INCREASE.—The dollar amount applied under
subparagraph (A)(i)—
‘‘(i) for 2024, shall be the dollar amount specified
under such subparagraph for 2023, increased by the
percentage increase in the consumer price index for
all urban consumers (United States city average) for
the 12-month period ending with June of the previous
year; and
‘‘(ii) for a subsequent year, shall be the dollar
amount specified in this clause (or clause (i)) for the
previous year (without application of subparagraph
(C)), increased by the percentage increase in the con-
sumer price index for all urban consumers (United
States city average) for the 12-month period ending
with June of the previous year.
‘‘(C) ROUNDING.—Any dollar amount determined under
subparagraph (B) that is not a multiple of $10 shall be
rounded to the nearest multiple of $10.
Time periods. ‘‘(3) REBATE AMOUNT.—
Estimate. ‘‘(A) IN GENERAL.—For purposes of paragraph (1), the
amount specified in this paragraph for a part B rebatable
drug assigned to a billing and payment code for a calendar
quarter is, subject to subparagraphs (B) and (G) and para-
graph (4), the estimated amount equal to the product of—
‘‘(i) the total number of units determined under
subparagraph (B) for the billing and payment code
of such drug; and
‘‘(ii) the amount (if any) by which—
‘‘(I) the amount equal to—
‘‘(aa) in the case of a part B rebatable
drug described in paragraph (1)(B) of sub-
section (b), 106 percent of the amount deter-
mined under paragraph (4) of such section
for such drug during the calendar quarter;
or
‘‘(bb) in the case of a part B rebatable
drug described in paragraph (1)(C) of such
subsection, the payment amount under such
paragraph for such drug during the calendar
quarter; exceeds
‘‘(II) the inflation-adjusted payment amount
determined under subparagraph (C) for such part
B rebatable drug during the calendar quarter.
‘‘(B) TOTAL NUMBER OF UNITS.—For purposes of
subparagraph (A)(i), the total number of units for the
billing and payment code with respect to a part B rebatable
drug furnished during a calendar quarter described in
subparagraph (A) is equal to—
‘‘(i) the number of units for the billing and payment
code of such drug furnished during such calendar
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quarter, minus
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1867
‘‘(ii) the number of units for such billing and pay-
ment code of such drug furnished during such calendar
quarter—
‘‘(I) with respect to which the manufacturer
provides a discount under the program under sec-
tion 340B of the Public Health Service Act or a
rebate under section 1927; or
‘‘(II) that are packaged into the payment
amount for an item or service and are not sepa-
rately payable.
‘‘(C) DETERMINATION OF INFLATION-ADJUSTED PAYMENT
AMOUNT.—The inflation-adjusted payment amount deter-
mined under this subparagraph for a part B rebatable
drug for a calendar quarter is—
‘‘(i) the payment amount for the billing and pay-
ment code for such drug in the payment amount bench-
mark quarter (as defined in subparagraph (D));
increased by
‘‘(ii) the percentage by which the rebate period
CPI–U (as defined in subparagraph (F)) for the cal-
endar quarter exceeds the benchmark period CPI–U
(as defined in subparagraph (E)).
‘‘(D) PAYMENT AMOUNT BENCHMARK QUARTER.—The Definition.
term ‘payment amount benchmark quarter’ means the cal-
endar quarter beginning July 1, 2021.
‘‘(E) BENCHMARK PERIOD CPI–U.—The term ‘benchmark Definition.
period CPI–U’ means the consumer price index for all
urban consumers (United States city average) for January
2021.
‘‘(F) REBATE PERIOD CPI–U.—The term ‘rebate period
CPI–U’ means, with respect to a calendar quarter described
in subparagraph (C), the greater of the benchmark period
CPI–U and the consumer price index for all urban con-
sumers (United States city average) for the first month
of the calendar quarter that is two calendar quarters prior
to such described calendar quarter.
‘‘(G) REDUCTION OR WAIVER FOR SHORTAGES AND
SEVERE SUPPLY CHAIN DISRUPTIONS.—The Secretary shall
reduce or waive the amount under subparagraph (A) with
respect to a part B rebatable drug and a calendar quarter—
‘‘(i) in the case of a part B rebatable drug that
is described as currently in shortage on the shortage
list in effect under section 506E of the Federal Food,
Drug, and Cosmetic Act at any point during the cal-
endar quarter; or
‘‘(ii) in the case of a biosimilar biological product, Determination.
when the Secretary determines there is a severe supply
chain disruption during the calendar quarter, such as
that caused by a natural disaster or other unique or
unexpected event.
‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS AND EXEMP- Effective dates.
TION.— Applicability.
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.—In the case of Time periods.
a part B rebatable drug first approved or licensed by the
Food and Drug Administration after December 1, 2020,
clause (i) of paragraph (3)(C) shall be applied as if the
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term ‘payment amount benchmark quarter’ were defined
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136 STAT. 1868 PUBLIC LAW 117–169—AUG. 16, 2022
under paragraph (3)(D) as the third full calendar quarter
after the day on which the drug was first marketed and
clause (ii) of paragraph (3)(C) shall be applied as if the
term ‘benchmark period CPI–U’ were defined under para-
graph (3)(E) as if the reference to ‘January 2021’ under
such paragraph were a reference to ‘the first month of
the first full calendar quarter after the day on which the
drug was first marketed’.
‘‘(B) TIMELINE FOR PROVISION OF REBATES FOR SUBSE-
QUENTLY APPROVED DRUGS.—In the case of a part B
rebatable drug first approved or licensed by the Food and
Drug Administration after December 1, 2020, paragraph
(1)(B) shall be applied as if the reference to ‘January 1,
2023’ under such paragraph were a reference to ‘the later
of the 6th full calendar quarter after the day on which
the drug was first marketed or January 1, 2023’.
‘‘(C) SELECTED DRUGS.—In the case of a part B
rebatable drug that is a selected drug (as defined in section
1192(c)) with respect to a price applicability period (as
defined in section 1191(b)(2)), in the case such drug is
no longer considered to be a selected drug under section
1192(c), for each applicable period (as defined under sub-
section (g)(7)) beginning after the price applicability period
with respect to such drug, clause (i) of paragraph (3)(C)
shall be applied as if the term ‘payment amount benchmark
quarter’ were defined under paragraph (3)(D) as the cal-
endar quarter beginning January 1 of the last year during
such price applicability period with respect to such selected
drug and clause (ii) of paragraph (3)(C) shall be applied
as if the term ‘benchmark period CPI–U’ were defined
under paragraph (3)(E) as if the reference to ‘January
2021’ under such paragraph were a reference to ‘the July
of the year preceding such last year’.
Effective date. ‘‘(5) APPLICATION TO BENEFICIARY COINSURANCE.—In the
Time period. case of a part B rebatable drug furnished on or after April
1, 2023, if the payment amount described in paragraph
(3)(A)(ii)(I) (or, in the case of a part B rebatable drug that
is a selected drug (as defined in section 1192(c)), the payment
amount described in subsection (b)(1)(B) for such drug) for
a calendar quarter exceeds the inflation adjusted payment for
such quarter—
‘‘(A) in computing the amount of any coinsurance
applicable under this part to an individual to whom such
drug is furnished, the computation of such coinsurance
shall be equal to 20 percent of the inflation-adjusted pay-
ment amount determined under paragraph (3)(C) for such
part B rebatable drug; and
Applicability. ‘‘(B) the amount of such coinsurance for such calendar
Determination. quarter, as computed under subparagraph (A), shall be
applied as a percent, as determined by the Secretary, to
the payment amount that would otherwise apply under
subparagraphs (B) or (C) of subsection (b)(1).
‘‘(6) REBATE DEPOSITS.—Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal Supple-
mentary Medical Insurance Trust Fund established under sec-
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tion 1841.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1869
‘‘(7) CIVIL MONEY PENALTY.—If a manufacturer of a part Time period.
B rebatable drug has failed to comply with the requirements
under paragraph (1)(B) for such drug for a calendar quarter,
the manufacturer shall be subject to, in accordance with a
process established by the Secretary pursuant to regulations,
a civil money penalty in an amount equal to at least 125
percent of the amount specified in paragraph (3) for such drug
for such calendar quarter. The provisions of section 1128A Applicability.
(other than subsections (a) (with respect to amounts of penalties
or additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
‘‘(8) LIMITATION ON ADMINISTRATIVE OR JUDICIAL REVIEW.—
There shall be no administrative or judicial review of any
of the following:
‘‘(A) The determination of units under this subsection.
‘‘(B) The determination of whether a drug is a part
B rebatable drug under this subsection.
‘‘(C) The calculation of the rebate amount under this
subsection.
‘‘(D) The computation of coinsurance under paragraph
(5) of this subsection.
‘‘(E) The computation of amounts paid under section
1833(a)(1)(EE).’’.
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 1833 of the
Social Security Act (42 U.S.C. 1395l) is amended—
(1) in subsection (a)(1)—
(A) in subparagraph (G), by inserting ‘‘, subject to
subsection (i)(9),’’ after ‘‘the amounts paid’’;
(B) in subparagraph (S), by striking ‘‘with respect to’’
and inserting ‘‘subject to subparagraph (EE), with respect
to’’;
(C) by striking ‘‘and (DD)’’ and inserting ‘‘(DD)’’; and
(D) by inserting before the semicolon at the end the Effective date.
following: ‘‘, and (EE) with respect to a part B rebatable Time period.
drug (as defined in paragraph (2) of section 1847A(i)) fur- Applicability.
nished on or after April 1, 2023, for which the payment
amount for a calendar quarter under paragraph (3)(A)(ii)(I)
of such section (or, in the case of a part B rebatable
drug that is a selected drug (as defined in section 1192(c)
for which, the payment amount described in section
1847A(b)(1)(B)) for such drug for such quarter exceeds the
inflation-adjusted payment under paragraph (3)(A)(ii)(II)
of such section for such quarter, the amounts paid shall
be equal to the percent of the payment amount under
paragraph (3)(A)(ii)(I) of such section or section
1847A(b)(1)(B), as applicable, that equals the difference
between (i) 100 percent, and (ii) the percent applied under
section 1847A(i)(5)(B)’’;
(2) in subsection (i), by adding at the end the following
new paragraph:
‘‘(9) In the case of a part B rebatable drug (as defined in Effective date.
paragraph (2) of section 1847A(i)) for which payment under this Determination.
subsection is not packaged into a payment for a service furnished Applicability.
on or after April 1, 2023, under the revised payment system under
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this subsection, in lieu of calculation of coinsurance and the amount
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136 STAT. 1870 PUBLIC LAW 117–169—AUG. 16, 2022
of payment otherwise applicable under this subsection, the provi-
sions of section 1847A(i)(5) and paragraph (1)(EE) of subsection
(a), shall, as determined appropriate by the Secretary, apply under
this subsection in the same manner as such provisions of section
1847A(i)(5) and subsection (a) apply under such section and sub-
section.’’; and
(3) in subsection (t)(8), by adding at the end the following
new subparagraph:
Effective date. ‘‘(F) PART B REBATABLE DRUGS.—In the case of a part
Time period. B rebatable drug (as defined in paragraph (2) of section
Determination.
Applicability. 1847A(i), except if such drug does not have a copayment
amount as a result of application of subparagraph (E))
for which payment under this part is not packaged into
a payment for a covered OPD service (or group of services)
furnished on or after April 1, 2023, and the payment for
such drug under this subsection is the same as the amount
for a calendar quarter under paragraph (3)(A)(ii)(I) of sec-
tion 1847A(i), under the system under this subsection, in
lieu of calculation of the copayment amount and the amount
of payment otherwise applicable under this subsection
(other than the application of the limitation described in
subparagraph (C)), the provisions of section 1847A(i)(5)
and paragraph (1)(EE) of subsection (a), shall, as deter-
mined appropriate by the Secretary, apply under this sub-
section in the same manner as such provisions of section
1847A(i)(5) and subsection (a) apply under such section
and subsection.’’.
(c) CONFORMING AMENDMENTS.—
(1) TO PART B ASP CALCULATION.—Section 1847A(c)(3) of
the Social Security Act (42 U.S.C. 1395w–3a(c)(3)) is amended
by inserting ‘‘subsection (i) or’’ before ‘‘section 1927’’.
(2) EXCLUDING PART B DRUG INFLATION REBATE FROM BEST
PRICE.—Section 1927(c)(1)(C)(ii)(I) of the Social Security Act
(42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by inserting ‘‘or
section 1847A(i)’’ after ‘‘this section’’.
(3) COORDINATION WITH MEDICAID REBATE INFORMATION
DISCLOSURE.—Section 1927(b)(3)(D)(i) of the Social Security Act
(42 U.S.C. 1396r–8(b)(3)(D)(i)) is amended by inserting ‘‘and
the rebate’’ after ‘‘the payment amount’’.
(4) EXCLUDING PART B DRUG INFLATION REBATES FROM AVER-
AGE MANUFACTURER PRICE.—Section 1927(k)(1)(B)(i) of the
Social Security Act (42 U.S.C. 1396r–8(k)(1)(B)(i)), as amended
by section 11001(b)(3), is amended—
(A) in subclause (V), by striking ‘‘and’’ at the end;
(B) in subclause (VI), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following new subclause:
‘‘(VII) rebates paid by manufacturers under
section 1847A(i); and’’.
Time period. (d) FUNDING.—In addition to amounts otherwise available,
there are appropriated to the Centers for Medicare & Medicaid
Services, out of any money in the Treasury not otherwise appro-
priated, $80,000,000 for fiscal year 2022, including $12,500,000
to carry out the provisions of, including the amendments made
by, this section in fiscal year 2022, and $7,500,000 to carry out
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the provisions of, including the amendments made by, this section
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1871
in each of fiscal years 2023 through 2031, to remain available
until expended.
SEC. 11102. MEDICARE PART D REBATE BY MANUFACTURERS.
(a) IN GENERAL.—Part D of title XVIII of the Social Security
Act is amended by inserting after section 1860D–14A (42 U.S.C.
1395w–114a) the following new section:
‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH 42 USC
PRICES INCREASING FASTER THAN INFLATION. 1395w–114b.
‘‘(a) REQUIREMENTS.—
‘‘(1) SECRETARIAL PROVISION OF INFORMATION.—Not later Reports.
than 9 months after the end of each applicable period (as
defined in subsection (g)(7)), subject to paragraph (3), the Sec-
retary shall, for each part D rebatable drug, report to each
manufacturer of such part D rebatable drug the following for
such period:
‘‘(A) The amount (if any) of the excess annual manufac-
turer price increase described in subsection (b)(1)(A)(ii) for
each dosage form and strength with respect to such drug
and period.
‘‘(B) The rebate amount specified under subsection (b)
for each dosage form and strength with respect to such
drug and period.
‘‘(2) MANUFACTURER REQUIREMENTS.—For each applicable Deadline.
period, the manufacturer of a part D rebatable drug, for each
dosage form and strength with respect to such drug, not later
than 30 days after the date of receipt from the Secretary
of the information described in paragraph (1) for such period,
shall provide to the Secretary a rebate that is equal to the
amount specified in subsection (b) for such dosage form and
strength with respect to such drug for such period.
‘‘(3) TRANSITION RULE FOR REPORTING.—The Secretary may, Time period.
for each rebatable covered part D drug, delay the timeframe Effective date.
for reporting the information and rebate amount described in
subparagraphs (A) and (B) of such paragraph for the applicable
periods beginning October 1, 2022, and October 1, 2023, until
not later than December 31, 2025.
‘‘(b) REBATE AMOUNT.— Determinations.
‘‘(1) IN GENERAL.—
‘‘(A) CALCULATION.—For purposes of this section, the
amount specified in this subsection for a dosage form and
strength with respect to a part D rebatable drug and
applicable period is, subject to subparagraph (C), paragraph
(5)(B), and paragraph (6), the estimated amount equal to
the product of—
‘‘(i) subject to subparagraph (B) of this paragraph,
the total number of units of such dosage form and
strength for each rebatable covered part D drug dis-
pensed under this part during the applicable period;
and
‘‘(ii) the amount (if any) by which—
‘‘(I) the annual manufacturer price (as deter-
mined in paragraph (2)) paid for such dosage form
and strength with respect to such part D rebatable
drug for the period; exceeds
‘‘(II) the inflation-adjusted payment amount
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determined under paragraph (3) for such dosage
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136 STAT. 1872 PUBLIC LAW 117–169—AUG. 16, 2022
form and strength with respect to such part D
rebatable drug for the period.
Effective date. ‘‘(B) EXCLUDED UNITS.—For purposes of subparagraph
(A)(i), beginning with plan year 2026, the Secretary shall
exclude from the total number of units for a dosage form
and strength with respect to a part D rebatable drug,
with respect to an applicable period, units of each dosage
form and strength of such part D rebatable drug for which
the manufacturer provides a discount under the program
under section 340B of the Public Health Service Act.
‘‘(C) REDUCTION OR WAIVER FOR SHORTAGES AND SEVERE
SUPPLY CHAIN DISRUPTIONS.—The Secretary shall reduce
or waive the amount under subparagraph (A) with respect
to a part D rebatable drug and an applicable period—
‘‘(i) in the case of a part D rebatable drug that
is described as currently in shortage on the shortage
list in effect under section 506E of the Federal Food,
Drug, and Cosmetic Act at any point during the
applicable period;
‘‘(ii) in the case of a generic part D rebatable
drug (described in subsection (g)(1)(C)(ii)) or a bio-
similar (defined as a biological product licensed under
section 351(k) of the Public Health Service Act), when
the Secretary determines there is a severe supply chain
disruption during the applicable period, such as that
caused by a natural disaster or other unique or unex-
pected event; and
‘‘(iii) in the case of a generic Part D rebatable
drug (as so described), if the Secretary determines
that without such reduction or waiver, the drug is
likely to be described as in shortage on such shortage
list during a subsequent applicable period.
‘‘(2) DETERMINATION OF ANNUAL MANUFACTURER PRICE.—
The annual manufacturer price determined under this para-
graph for a dosage form and strength, with respect to a part
D rebatable drug and an applicable period, is the sum of the
products of—
‘‘(A) the average manufacturer price (as defined in
subsection (g)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to each
of the calendar quarters of such period; and
‘‘(B) the ratio of—
‘‘(i) the total number of units of such dosage form
and strength reported under section 1927 with respect
to each such calendar quarter of such period; to
‘‘(ii) the total number of units of such dosage form
and strength reported under section 1927 with respect
to such period, as determined by the Secretary.
‘‘(3) DETERMINATION OF INFLATION-ADJUSTED PAYMENT
AMOUNT.—The inflation-adjusted payment amount determined
under this paragraph for a dosage form and strength with
respect to a part D rebatable drug for an applicable period,
subject to paragraph (5), is—
‘‘(A) the benchmark period manufacturer price deter-
mined under paragraph (4) for such dosage form and
strength with respect to such drug and period; increased
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by
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1873
‘‘(B) the percentage by which the applicable period
CPI–U (as defined in subsection (g)(5)) for the period
exceeds the benchmark period CPI–U (as defined in sub-
section (g)(4)).
‘‘(4) DETERMINATION OF BENCHMARK PERIOD MANUFACTURER
PRICE.—The benchmark period manufacturer price determined
under this paragraph for a dosage form and strength, with
respect to a part D rebatable drug and an applicable period,
is the sum of the products of—
‘‘(A) the average manufacturer price (as defined in
subsection (g)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to each
of the calendar quarters of the payment amount benchmark
period (as defined in subsection (g)(3)); and
‘‘(B) the ratio of—
‘‘(i) the total number of units reported under sec-
tion 1927 of such dosage form and strength with
respect to each such calendar quarter of such payment
amount benchmark period; to
‘‘(ii) the total number of units reported under sec-
tion 1927 of such dosage form and strength with
respect to such payment amount benchmark period.
‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS AND EXEMP-
TION.—
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.—In the case of Effective dates.
a part D rebatable drug first approved or licensed by the Applicability.
Time period.
Food and Drug Administration after October 1, 2021, sub-
paragraphs (A) and (B) of paragraph (4) shall be applied
as if the term ‘payment amount benchmark period’ were
defined under subsection (g)(3) as the first calendar year
beginning after the day on which the drug was first mar-
keted and subparagraph (B) of paragraph (3) shall be
applied as if the term ‘benchmark period CPI–U’ were
defined under subsection (g)(4) as if the reference to
‘January 2021’ under such subsection were a reference
to ‘January of the first year beginning after the date on
which the drug was first marketed’.
‘‘(B) TREATMENT OF NEW FORMULATIONS.—
‘‘(i) IN GENERAL.—In the case of a part D rebatable
drug that is a line extension of a part D rebatable
drug that is an oral solid dosage form, the Secretary
shall establish a formula for determining the rebate
amount under paragraph (1) and the inflation adjusted
payment amount under paragraph (3) with respect to
such part D rebatable drug and an applicable period,
consistent with the formula applied under subsection
(c)(2)(C) of section 1927 for determining a rebate obliga-
tion for a rebate period under such section.
‘‘(ii) LINE EXTENSION DEFINED.—In this subpara-
graph, the term ‘line extension’ means, with respect
to a part D rebatable drug, a new formulation of the
drug, such as an extended release formulation, but
does not include an abuse-deterrent formulation of the
drug (as determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
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extended release formulation.
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136 STAT. 1874 PUBLIC LAW 117–169—AUG. 16, 2022
Effective date. ‘‘(C) SELECTED DRUGS.—In the case of a part D
Applicability. rebatable drug that is a selected drug (as defined in section
1192(c)) with respect to a price applicability period (as
defined in section 1191(b)(2)), in the case such drug is
no longer considered to be a selected drug under section
1192(c), for each applicable period (as defined under sub-
section (g)(7)) beginning after the price applicability period
with respect to such drug, subparagraphs (A) and (B) of
paragraph (4) shall be applied as if the term ‘payment
amount benchmark period’ were defined under subsection
(g)(3) as the last year beginning during such price applica-
bility period with respect to such selected drug and
subparagraph (B) of paragraph (3) shall be applied as if
the term ‘benchmark period CPI–U’ were defined under
subsection (g)(4) as if the reference to ‘January 2021’ under
such subsection were a reference to ‘January of the last
year beginning during such price applicability period with
respect to such drug’.
‘‘(6) RECONCILIATION IN CASE OF REVISED INFORMATION.—
The Secretary shall provide for a method and process under
which, in the case where a PDP sponsor of a prescription
drug plan or an MA organization offering an MA–PD plan
submits revisions to the number of units of a rebatable covered
part D drug dispensed, the Secretary determines, pursuant
to such revisions, adjustments, if any, to the calculation of
the amount specified in this subsection for a dosage form and
strength with respect to such part D rebatable drug and an
applicable period and reconciles any overpayments or underpay-
Deadline. ments in amounts paid as rebates under this subsection. Any
identified underpayment shall be rectified by the manufacturer
not later than 30 days after the date of receipt from the Sec-
retary of information on such underpayment.
‘‘(c) REBATE DEPOSITS.—Amounts paid as rebates under sub-
section (b) shall be deposited into the Medicare Prescription Drug
Account in the Federal Supplementary Medical Insurance Trust
Fund established under section 1841.
‘‘(d) INFORMATION.—For purposes of carrying out this section,
the Secretary shall use information submitted by—
‘‘(1) manufacturers under section 1927(b)(3);
‘‘(2) States under section 1927(b)(2)(A); and
‘‘(3) PDP sponsors of prescription drug plans and MA
organization offering MA–PD plans under this part.
‘‘(e) CIVIL MONEY PENALTY.—If a manufacturer of a part D
rebatable drug has failed to comply with the requirement under
subsection (a)(2) with respect to such drug for an applicable period,
the manufacturer shall be subject to a civil money penalty in
an amount equal to 125 percent of the amount specified in sub-
Applicability. section (b) for such drug for such period. The provisions of section
1128A (other than subsections (a) (with respect to amounts of
penalties or additional assessments) and (b)) shall apply to a civil
money penalty under this subsection in the same manner as such
provisions apply to a penalty or proceeding under section 1128A(a).
‘‘(f) LIMITATION ON ADMINISTRATIVE OR JUDICIAL REVIEW.—
There shall be no administrative or judicial review of any of the
following:
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‘‘(1) The determination of units under this section.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1875
‘‘(2) The determination of whether a drug is a part D
rebatable drug under this section.
‘‘(3) The calculation of the rebate amount under this section.
‘‘(g) DEFINITIONS.—In this section:
‘‘(1) PART D REBATABLE DRUG.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), the term ‘part D rebatable drug’ means, with respect
to an applicable period, a drug or biological described in
subparagraph (C) that is a covered part D drug (as such
term is defined under section 1860D–2(e)).
‘‘(B) EXCLUSION.—
‘‘(i) IN GENERAL.—Such term shall, with respect Determinations.
to an applicable period, not include a drug or biological Estimate.
if the average annual total cost under this part for
such period per individual who uses such a drug or
biological, as determined by the Secretary, is less than,
subject to clause (ii), $100, as determined by the Sec-
retary using the most recent data available or, if data
is not available, as estimated by the Secretary.
‘‘(ii) INCREASE.—The dollar amount applied under Time periods.
clause (i)— Effective dates.
‘‘(I) for the applicable period beginning October
1, 2023, shall be the dollar amount specified under
such clause for the applicable period beginning
October 1, 2022, increased by the percentage
increase in the consumer price index for all urban
consumers (United States city average) for the 12-
month period beginning with October of 2023; and
‘‘(II) for a subsequent applicable period, shall
be the dollar amount specified in this clause for
the previous applicable period, increased by the
percentage increase in the consumer price index
for all urban consumers (United States city aver-
age) for the 12-month period beginning with
October of the previous period.
Any dollar amount specified under this clause that
is not a multiple of $10 shall be rounded to the nearest
multiple of $10.
‘‘(C) DRUG OR BIOLOGICAL DESCRIBED.—A drug or
biological described in this subparagraph is a drug or
biological that, as of the first day of the applicable period
involved, is—
‘‘(i) a drug approved under a new drug application
under section 505(c) of the Federal Food, Drug, and
Cosmetic Act;
‘‘(ii) a drug approved under an abbreviated new
drug application under section 505(j) of the Federal
Food, Drug, and Cosmetic Act, in the case where—
‘‘(I) the reference listed drug approved under
section 505(c) of the Federal Food, Drug, and Cos-
metic Act, including any ‘authorized generic drug’
(as that term is defined in section 505(t)(3) of
the Federal Food, Drug, and Cosmetic Act), is not
being marketed, as identified in the Food and Drug
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Administration’s National Drug Code Directory;
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136 STAT. 1876 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(II) there is no other drug approved under
section 505(j) of the Federal Food, Drug, and Cos-
metic Act that is rated as therapeutically equiva-
lent (under the Food and Drug Administration’s
most recent publication of ‘Approved Drug Prod-
ucts with Therapeutic Equivalence Evaluations’)
and that is being marketed, as identified in the
Food and Drug Administration’s National Drug
Code Directory;
Time period. ‘‘(III) the manufacturer is not a ‘first applicant’
during the ‘180-day exclusivity period’, as those
terms are defined in section 505(j)(5)(B)(iv) of the
Federal Food, Drug, and Cosmetic Act; and
‘‘(IV) the manufacturer is not a ‘first approved
applicant’ for a competitive generic therapy, as
that term is defined in section 505(j)(5)(B)(v) of
the Federal Food, Drug, and Cosmetic Act; or
‘‘(iii) a biological licensed under section 351 of the
Public Health Service Act.
‘‘(2) UNIT.—The term ‘unit’ means, with respect to a part
D rebatable drug, the lowest dispensable amount (such as a
capsule or tablet, milligram of molecules, or grams) of the
part D rebatable drug, as reported under section 1927.
‘‘(3) PAYMENT AMOUNT BENCHMARK PERIOD.—The term ‘pay-
ment amount benchmark period’ means the period beginning
January 1, 2021, and ending in the month immediately prior
to October 1, 2021.
‘‘(4) BENCHMARK PERIOD CPI–U.—The term ‘benchmark
period CPI–U’ means the consumer price index for all urban
consumers (United States city average) for January 2021.
‘‘(5) APPLICABLE PERIOD CPI–U.—The term ‘applicable period
CPI–U’ means, with respect to an applicable period, the con-
sumer price index for all urban consumers (United States city
average) for the first month of such applicable period.
‘‘(6) AVERAGE MANUFACTURER PRICE.—The term ‘average
manufacturer price’ has the meaning, with respect to a part
D rebatable drug of a manufacturer, given such term in section
1927(k)(1), with respect to a covered outpatient drug of a manu-
facturer for a rebate period under section 1927.
‘‘(7) APPLICABLE PERIOD.—The term ‘applicable period’
means a 12-month period beginning with October 1 of a year
(beginning with October 1, 2022).
‘‘(h) IMPLEMENTATION FOR 2022, 2023, AND 2024.—The Sec-
retary shall implement this section for 2022, 2023, and 2024 by
program instruction or other forms of program guidance.’’.
(b) CONFORMING AMENDMENTS.—
(1) TO PART B ASP CALCULATION.—Section 1847A(c)(3) of
the Social Security Act (42 U.S.C. 1395w–3a(c)(3)), as amended
by section 11101(c)(1), is amended by striking ‘‘subsection (i)
or section 1927’’ and inserting ‘‘subsection (i), section 1927,
or section 1860D–14B’’.
(2) EXCLUDING PART D DRUG INFLATION REBATE FROM BEST
PRICE.—Section 1927(c)(1)(C)(ii)(I) of the Social Security Act
(42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)), as amended by section
11101(c)(2), is amended by striking ‘‘or section 1847A(i)’’ and
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inserting ‘‘, section 1847A(i), or section 1860D–14B’’.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1877
(3) COORDINATION WITH MEDICAID REBATE INFORMATION
DISCLOSURE.—Section 1927(b)(3)(D)(i) of the Social Security Act
(42 U.S.C. 1396r–8(b)(3)(D)(i)), as amended by sections 11002(b)
and 11101(c)(3), is amended by striking ‘‘or section 1192(f),
including rebates under paragraph (4) of such section’’ and
inserting ‘‘, section 1192(f), including rebates under paragraph
(4) of such section, or section 1860D–14B’’.
(4) EXCLUDING PART D DRUG INFLATION REBATES FROM
AVERAGE MANUFACTURER PRICE.—Section 1927(k)(1)(B)(i) of the
Social Security Act (42 U.S.C. 1396r–8(k)(1)(B)(i)), as amended
by section 11001(b)(3) and section 11101(c)(4), is amended by
adding at the end the following new subclause:
(A) in subclause (VI), by striking ‘‘and’’ at the end;
(B) in subclause (VII), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following new subclause:
‘‘(VIII) rebates paid by manufacturers under
section 1860D–14B.’’.
(c) FUNDING.—In addition to amounts otherwise available, there Time periods.
are appropriated to the Centers for Medicare & Medicaid Services,
out of any money in the Treasury not otherwise appropriated,
$80,000,000 for fiscal year 2022, including $12,500,000 to carry
out the provisions of, including the amendments made by, this
section in fiscal year 2022, and $7,500,000 to carry out the provi-
sions of, including the amendments made by, this section in each
of fiscal years 2023 through 2031, to remain available until
expended.
PART 3—PART D IMPROVEMENTS AND MAX-
IMUM OUT-OF-POCKET CAP FOR MEDICARE
BENEFICIARIES
SEC. 11201. MEDICARE PART D BENEFIT REDESIGN. Time periods.
(a) BENEFIT STRUCTURE REDESIGN.—Section 1860D–2(b) of the
Social Security Act (42 U.S.C. 1395w–102(b)) is amended—
(1) in paragraph (2)—
(A) in subparagraph (A), in the matter preceding clause
(i), by inserting ‘‘for a year preceding 2025 and for costs
above the annual deductible specified in paragraph (1)
and up to the annual out-of-pocket threshold specified in
paragraph (4)(B) for 2025 and each subsequent year’’ after
‘‘paragraph (3)’’;
(B) in subparagraph (C)—
(i) in clause (i), in the matter preceding subclause
(I), by inserting ‘‘for a year preceding 2025,’’ after
‘‘paragraph (4),’’; and
(ii) in clause (ii)(III), by striking ‘‘and each subse-
quent year’’ and inserting ‘‘through 2024’’; and
(C) in subparagraph (D)—
(i) in clause (i)—
(I) in the matter preceding subclause (I), by
inserting ‘‘for a year preceding 2025,’’ after ‘‘para-
graph (4),’’; and
(II) in subclause (I)(bb), by striking ‘‘a year
after 2018’’ and inserting ‘‘each of years 2019
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through 2024’’; and
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136 STAT. 1878 PUBLIC LAW 117–169—AUG. 16, 2022
(ii) in clause (ii)(V), by striking ‘‘2019 and each
subsequent year’’ and inserting ‘‘each of years 2019
through 2024’’;
(2) in paragraph (3)(A)—
(A) in the matter preceding clause (i), by inserting
‘‘for a year preceding 2025,’’ after ‘‘and (4),’’; and
(B) in clause (ii), by striking ‘‘for a subsequent year’’
and inserting ‘‘for each of years 2007 through 2024’’; and
(3) in paragraph (4)—
(A) in subparagraph (A)—
(i) in clause (i)—
(I) by redesignating subclauses (I) and (II) as
items (aa) and (bb), respectively, and moving the
margin of each such redesignated item 2 ems to
the right;
(II) in the matter preceding item (aa), as
redesignated by subclause (I), by striking ‘‘is equal
to the greater of—’’ and inserting ‘‘is equal to—
‘‘(I) for a year preceding 2024, the greater
of—’’;
(III) by striking the period at the end of item
(bb), as redesignated by subclause (I), and
inserting ‘‘; and’’; and
(IV) by adding at the end the following:
‘‘(II) for 2024 and each succeeding year, $0.’’;
and
(ii) in clause (ii)—
(I) by striking ‘‘clause (i)(I)’’ and inserting
‘‘clause (i)(I)(aa)’’; and
(II) by adding at the end the following new
sentence: ‘‘The Secretary shall continue to cal-
culate the dollar amounts specified in clause
(i)(I)(aa), including with the adjustment under this
clause, after 2023 for purposes of section 1860D–
14(a)(1)(D)(iii).’’;
(B) in subparagraph (B)—
(i) in clause (i)—
(I) in subclause (V), by striking ‘‘or’’ at the
end;
(II) in subclause (VI)—
(aa) by striking ‘‘for a subsequent year’’
and inserting ‘‘for each of years 2021 through
2024’’; and
(bb) by striking the period at the end and
inserting a semicolon; and
(III) by adding at the end the following new
subclauses:
‘‘(VII) for 2025, is equal to $2,000; or
‘‘(VIII) for a subsequent year, is equal to the
amount specified in this subparagraph for the pre-
vious year, increased by the annual percentage
increase described in paragraph (6) for the year
involved.’’; and
(ii) in clause (ii), by striking ‘‘clause (i)(II)’’ and
inserting ‘‘clause (i)’’;
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(C) in subparagraph (C)—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1879
(i) in clause (i), by striking ‘‘and for amounts’’
and inserting ‘‘and, for a year preceding 2025, for
amounts’’; and
(ii) in clause (iii)—
(I) by redesignating subclauses (I) through (IV)
as items (aa) through (dd) and indenting appro-
priately;
(II) by striking ‘‘if such costs are borne or
paid’’ and inserting ‘‘if such costs—
‘‘(I) are borne or paid—’’; and
(III) in item (dd), by striking the period at
the end and inserting ‘‘; or’’; and
(IV) by adding at the end the following new
subclause:
‘‘(II) for 2025 and subsequent years, are
reimbursed through insurance, a group health
plan, or certain other third party payment arrange-
ments, but not including the coverage provided
by a prescription drug plan or an MA–PD plan
that is basic prescription drug coverage (as defined
in subsection (a)(3)) or any payments by a manu-
facturer under the manufacturer discount program
under section 1860D–14C.’’; and
(D) in subparagraph (E), by striking ‘‘In applying’’ and
inserting ‘‘For each of years 2011 through 2024, in
applying’’.
(b) REINSURANCE PAYMENT AMOUNT.—Section 1860D–15(b) of
the Social Security Act (42 U.S.C. 1395w–115(b)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘equal to 80 percent’’ and inserting
‘‘equal to—
‘‘(A) for a year preceding 2025, 80 percent’’;
(B) in subparagraph (A), as added by subparagraph
(A), by striking the period at the end and inserting ‘‘;
and’’; and
(C) by adding at the end the following new subpara-
graph:
‘‘(B) for 2025 and each subsequent year, the sum of—
‘‘(i) with respect to applicable drugs (as defined
in section 1860D–14C(g)(2)), an amount equal to 20
percent of such allowable reinsurance costs attributable
to that portion of gross covered prescription drug costs
as specified in paragraph (3) incurred in the coverage
year after such individual has incurred costs that
exceed the annual out-of-pocket threshold specified in
section 1860D–2(b)(4)(B); and
‘‘(ii) with respect to covered part D drugs that
are not applicable drugs (as so defined), an amount
equal to 40 percent of such allowable reinsurance costs
attributable to that portion of gross covered prescrip-
tion drug costs as specified in paragraph (3) incurred
in the coverage year after such individual has incurred
costs that exceed the annual out-of-pocket threshold
specified in section 1860D–2(b)(4)(B).’’;
(2) in paragraph (2)—
(A) by striking ‘‘COSTS.—For purposes’’ and inserting
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‘‘COSTS.—
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136 STAT. 1880 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(A) IN GENERAL.—Subject to subparagraph (B), for
purposes’’; and
(B) by adding at the end the following new subpara-
graph:
‘‘(B) INCLUSION OF MANUFACTURER DISCOUNTS ON
Definition. APPLICABLE DRUGS.—For purposes of applying subpara-
graph (A), the term ‘allowable reinsurance costs’ shall
include the portion of the negotiated price (as defined in
section 1860D–14C(g)(6)) of an applicable drug (as defined
in section 1860D–14C(g)(2)) that was paid by a manufac-
turer under the manufacturer discount program under sec-
tion 1860D–14C.’’; and
(3) in paragraph (3)—
(A) in the first sentence, by striking ‘‘For purposes’’
and inserting ‘‘Subject to paragraph (2)(B), for purposes’’;
and
(B) in the second sentence, by inserting ‘‘(or, with
respect to 2025 and subsequent years, in the case of an
applicable drug, as defined in section 1860D–14C(g)(2), by
a manufacturer)’’ after ‘‘by the individual or under the
plan’’.
(c) MANUFACTURER DISCOUNT PROGRAM.—
(1) IN GENERAL.—Part D of title XVIII of the Social Security
Act (42 U.S.C. 1395w–101 through 42 U.S.C. 1395w–153), as
amended by section 11102, is amended by inserting after section
1860D–14B the following new sections:
42 USC ‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM.
1395w–114c.
‘‘(a) ESTABLISHMENT.—The Secretary shall establish a manufac-
turer discount program (in this section referred to as the ‘program’).
Under the program, the Secretary shall enter into agreements
described in subsection (b) with manufacturers and provide for
the performance of the duties described in subsection (c).
‘‘(b) TERMS OF AGREEMENT.—
‘‘(1) IN GENERAL.—
Effective date. ‘‘(A) AGREEMENT.—An agreement under this section
shall require the manufacturer to provide, in accordance
with this section, discounted prices for applicable drugs
of the manufacturer that are dispensed to applicable bene-
ficiaries on or after January 1, 2025.
‘‘(B) CLARIFICATION.—Nothing in this section shall be
construed as affecting—
‘‘(i) the application of a coinsurance of 25 percent
of the negotiated price, as applied under paragraph
(2)(A) of section 1860D–2(b), for costs described in such
paragraph; or
‘‘(ii) the application of the copayment amount
described in paragraph (4)(A) of such section, with
respect to costs described in such paragraph.
Deadlines. ‘‘(C) TIMING OF AGREEMENT.—
‘‘(i) SPECIAL RULE FOR 2025.—In order for an agree-
ment with a manufacturer to be in effect under this
section with respect to the period beginning on January
1, 2025, and ending on December 31, 2025, the manu-
facturer shall enter into such agreement not later than
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March 1, 2024.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1881
‘‘(ii) 2026 AND SUBSEQUENT YEARS.—In order for
an agreement with a manufacturer to be in effect under
this section with respect to plan year 2026 or a subse-
quent plan year, the manufacturer shall enter into
such agreement not later than a calendar quarter or
semi-annual deadline established by the Secretary.
‘‘(2) PROVISION OF APPROPRIATE DATA.—Each manufacturer Determination.
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
‘‘(3) COMPLIANCE WITH REQUIREMENTS FOR ADMINISTRATION
OF PROGRAM.—Each manufacturer with an agreement in effect
under this section shall comply with requirements imposed
by the Secretary, as applicable, for purposes of administering
the program, including any determination under subparagraph
(A) of subsection (c)(1) or procedures established under such
subsection (c)(1).
‘‘(4) LENGTH OF AGREEMENT.—
‘‘(A) IN GENERAL.—An agreement under this section
shall be effective for an initial period of not less than
12 months and shall be automatically renewed for a period
of not less than 1 year unless terminated under subpara-
graph (B).
‘‘(B) TERMINATION.—
‘‘(i) BY THE SECRETARY.—The Secretary shall pro-
vide for termination of an agreement under this section
for a knowing and willful violation of the requirements
of the agreement or other good cause shown. Such Time period.
termination shall not be effective earlier than 30 days
after the date of notice to the manufacturer of such
termination. The Secretary shall provide, upon request, Hearings.
a manufacturer with a hearing concerning such a
termination, and such hearing shall take place prior
to the effective date of the termination with sufficient
time for such effective date to be repealed if the Sec-
retary determines appropriate.
‘‘(ii) BY A MANUFACTURER.—A manufacturer may
terminate an agreement under this section for any
reason. Any such termination shall be effective, with Effective dates.
respect to a plan year—
‘‘(I) if the termination occurs before January
31 of a plan year, as of the day after the end
of the plan year; and
‘‘(II) if the termination occurs on or after
January 31 of a plan year, as of the day after
the end of the succeeding plan year.
‘‘(iii) EFFECTIVENESS OF TERMINATION.—Any termi-
nation under this subparagraph shall not affect dis-
counts for applicable drugs of the manufacturer that
are due under the agreement before the effective date
of its termination.
‘‘(5) EFFECTIVE DATE OF AGREEMENT.—An agreement under
this section shall take effect at the start of a calendar quarter
or another date specified by the Secretary.
‘‘(c) DUTIES DESCRIBED.—The duties described in this subsection
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are the following:
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136 STAT. 1882 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(1) ADMINISTRATION OF PROGRAM.—Administering the pro-
gram, including—
‘‘(A) the determination of the amount of the discounted
price of an applicable drug of a manufacturer;
‘‘(B) the establishment of procedures to ensure that,
not later than the applicable number of calendar days
after the dispensing of an applicable drug by a pharmacy
or mail order service, the pharmacy or mail order service
is reimbursed for an amount equal to the difference
between—
‘‘(i) the negotiated price of the applicable drug;
and
‘‘(ii) the discounted price of the applicable drug;
‘‘(C) the establishment of procedures to ensure that
the discounted price for an applicable drug under this
section is applied before any coverage or financial assist-
ance under other health benefit plans or programs that
provide coverage or financial assistance for the purchase
or provision of prescription drug coverage on behalf of
applicable beneficiaries as specified by the Secretary; and
‘‘(D) providing a reasonable dispute resolution mecha-
nism to resolve disagreements between manufacturers,
prescription drug plans and MA–PD plans, and the Sec-
retary.
‘‘(2) MONITORING COMPLIANCE.—The Secretary shall mon-
itor compliance by a manufacturer with the terms of an agree-
ment under this section.
‘‘(3) COLLECTION OF DATA FROM PRESCRIPTION DRUG PLANS
AND MA–PD PLANS.—The Secretary may collect appropriate data
from prescription drug plans and MA–PD plans in a timeframe
that allows for discounted prices to be provided for applicable
drugs under this section.
‘‘(d) ADMINISTRATION.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
‘‘(2) LIMITATION.—In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
‘‘(e) CIVIL MONEY PENALTY.—
Determination. ‘‘(1) IN GENERAL.—A manufacturer that fails to provide
discounted prices for applicable drugs of the manufacturer dis-
pensed to applicable beneficiaries in accordance with an agree-
ment in effect under this section shall be subject to a civil
money penalty for each such failure in an amount the Secretary
determines is equal to the sum of—
‘‘(A) the amount that the manufacturer would have
paid with respect to such discounts under the agreement,
which will then be used to pay the discounts which the
manufacturer had failed to provide; and
‘‘(B) 25 percent of such amount.
‘‘(2) APPLICATION.—The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to a civil money
penalty under this subsection in the same manner as such
provisions apply to a penalty or proceeding under section
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1128A(a).
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1883
‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF OTHER COV-
ERED PART D DRUGS.—Nothing in this section shall prevent an
applicable beneficiary from purchasing a covered part D drug that
is not an applicable drug (including a generic drug or a drug
that is not on the formulary of the prescription drug plan or MA–
PD plan that the applicable beneficiary is enrolled in).
‘‘(g) DEFINITIONS.—In this section:
‘‘(1) APPLICABLE BENEFICIARY.—The term ‘applicable bene-
ficiary’ means an individual who, on the date of dispensing
a covered part D drug—
‘‘(A) is enrolled in a prescription drug plan or an MA–
PD plan;
‘‘(B) is not enrolled in a qualified retiree prescription
drug plan; and
‘‘(C) has incurred costs, as determined in accordance
with section 1860D–2(b)(4)(C), for covered part D drugs
in the year that exceed the annual deductible specified
in section 1860D–2(b)(1).
‘‘(2) APPLICABLE DRUG.—The term ‘applicable drug’, with
respect to an applicable beneficiary—
‘‘(A) means a covered part D drug—
‘‘(i) approved under a new drug application under
section 505(c) of the Federal Food, Drug, and Cosmetic
Act or, in the case of a biologic product, licensed under
section 351 of the Public Health Service Act; and
‘‘(ii)(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;
‘‘(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 avail-
able under the prescription drug plan or MA–PD plan
that the applicable beneficiary is enrolled in; or
‘‘(III) is provided through an exception or appeal;
and
‘‘(B) does not include a selected drug (as referred to
under section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such drug.
‘‘(3) APPLICABLE NUMBER OF CALENDAR DAYS.—The term
‘applicable number of calendar days’ means—
‘‘(A) with respect to claims for reimbursement sub-
mitted electronically, 14 days; and
‘‘(B) with respect to claims for reimbursement sub-
mitted otherwise, 30 days.
‘‘(4) DISCOUNTED PRICE.—
‘‘(A) IN GENERAL.—The term ‘discounted price’ means,
subject to subparagraphs (B) and (C), with respect to an
applicable drug of a manufacturer dispensed during a year
to an applicable beneficiary—
‘‘(i) who has not incurred costs, as determined
in accordance with section 1860D–2(b)(4)(C), for cov-
ered part D drugs in the year that are equal to or
exceed the annual out-of-pocket threshold specified in
section 1860D–2(b)(4)(B)(i) for the year, 90 percent of
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the negotiated price of such drug; and
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136 STAT. 1884 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(ii) who has incurred such costs, as so determined,
in the year that are equal to or exceed such threshold
for the year, 80 percent of the negotiated price of
such drug.
‘‘(B) PHASE-IN FOR CERTAIN DRUGS DISPENSED TO LIS
BENEFICIARIES.—
‘‘(i) IN GENERAL.—In the case of an applicable drug
of a specified manufacturer (as defined in clause (ii))
that is marketed as of the date of enactment of this
subparagraph and dispensed for an applicable bene-
ficiary who is a subsidy eligible individual (as defined
in section 1860D–14(a)(3)), the term ‘discounted price’
means the specified LIS percent (as defined in clause
(iii)) of the negotiated price of the applicable drug
of the manufacturer.
‘‘(ii) SPECIFIED MANUFACTURER.—
‘‘(I) IN GENERAL.—In this subparagraph, sub-
ject to subclause (II), the term ‘specified manufac-
turer’ means a manufacturer of an applicable drug
for which, in 2021—
‘‘(aa) the manufacturer had a coverage gap
discount agreement under section 1860D–14A;
‘‘(bb) the total expenditures for all of the
specified drugs of the manufacturer covered
by such agreement or agreements for such
year and covered under this part during such
year represented less than 1.0 percent of the
total expenditures under this part for all cov-
ered Part D drugs during such year; and
‘‘(cc) the total expenditures for all of the
specified drugs of the manufacturer that are
single source drugs and biological products for
which payment may be made under part B
during such year represented less than 1.0
percent of the total expenditures under part
B for all drugs or biological products for which
payment may be made under such part during
such year.
‘‘(II) SPECIFIED DRUGS.—
‘‘(aa) IN GENERAL.—For purposes of this
clause, the term ‘specified drug’ means, with
respect to a specified manufacturer, for 2021,
an applicable drug that is produced, prepared,
propagated, compounded, converted, or proc-
essed by the manufacturer.
‘‘(bb) AGGREGATION RULE.—All persons
treated as a single employer under subsection
(a) or (b) of section 52 of the Internal Revenue
Code of 1986 shall be treated as one manufac-
Determination. turer for purposes of this subparagraph. For
Requirement. purposes of making a determination pursuant
Attestation. to the previous sentence, an agreement under
this section shall require that a manufacturer
provide and attest to such information as
specified by the Secretary as necessary.
Time periods. ‘‘(III) LIMITATION.—The term ‘specified manu-
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Effective dates. facturer’ shall not include a manufacturer
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1885
described in subclause (I) if such manufacturer
is acquired after 2021 by another manufacturer
that is not a specified manufacturer, effective at
the beginning of the plan year immediately fol-
lowing such acquisition or, in the case of an
acquisition before 2025, effective January 1, 2025.
‘‘(iii) SPECIFIED LIS PERCENT.—In this subpara-
graph, the ‘specified LIS percent’ means, with respect
to a year—
‘‘(I) for an applicable drug dispensed for an
applicable beneficiary described in clause (i) who
has not incurred costs, as determined in accord-
ance with section 1860D–2(b)(4)(C), for covered
part D drugs in the year that are equal to or
exceed the annual out-of-pocket threshold specified
in section 1860D–2(b)(4)(B)(i) for the year—
‘‘(aa) for 2025, 99 percent;
‘‘(bb) for 2026, 98 percent;
‘‘(cc) for 2027, 95 percent;
‘‘(dd) for 2028, 92 percent; and
‘‘(ee) for 2029 and each subsequent year,
90 percent; and
‘‘(II) for an applicable drug dispensed for an
applicable beneficiary described in clause (i) who
has incurred costs, as determined in accordance
with section 1860D–2(b)(4)(C), for covered part D
drugs in the year that are equal to or exceed
the annual out-of-pocket threshold specified in sec-
tion 1860D–2(b)(4)(B)(i) for the year—
‘‘(aa) for 2025, 99 percent;
‘‘(bb) for 2026, 98 percent;
‘‘(cc) for 2027, 95 percent;
‘‘(dd) for 2028, 92 percent;
‘‘(ee) for 2029, 90 percent;
‘‘(ff) for 2030, 85 percent; and
‘‘(gg) for 2031 and each subsequent year,
80 percent.
‘‘(C) PHASE-IN FOR SPECIFIED SMALL MANUFACTURERS.—
‘‘(i) IN GENERAL.—In the case of an applicable drug
of a specified small manufacturer (as defined in clause
(ii)) that is marketed as of the date of enactment
of this subparagraph and dispensed for an applicable
beneficiary, the term ‘discounted price’ means the
specified small manufacturer percent (as defined in
clause (iii)) of the negotiated price of the applicable
drug of the manufacturer.
‘‘(ii) SPECIFIED SMALL MANUFACTURER.—
‘‘(I) IN GENERAL.—In this subparagraph, sub-
ject to subclause (III), the term ‘specified small
manufacturer’ means a manufacturer of an
applicable drug for which, in 2021—
‘‘(aa) the manufacturer is a specified
manufacturer (as defined in subparagraph
(B)(ii)); and
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136 STAT. 1886 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(bb) the total expenditures under part
D for any one of the specified small manufac-
turer drugs of the manufacturer that are cov-
ered by the agreement or agreements under
section 1860D–14A of such manufacturer for
such year and covered under this part during
such year are equal to or more than 80 percent
of the total expenditures under this part for
all specified small manufacturer drugs of the
manufacturer that are covered by such agree-
ment or agreements for such year and covered
under this part during such year.
‘‘(II) SPECIFIED SMALL MANUFACTURER
DRUGS.—
‘‘(aa) IN GENERAL.—For purposes of this
clause, the term ‘specified small manufacturer
drugs’ means, with respect to a specified small
manufacturer, for 2021, an applicable drug
that is produced, prepared, propagated, com-
pounded, converted, or processed by the manu-
facturer.
‘‘(bb) AGGREGATION RULE.—All persons
treated as a single employer under subsection
(a) or (b) of section 52 of the Internal Revenue
Code of 1986 shall be treated as one manufac-
turer for purposes of this subparagraph. For
purposes of making a determination pursuant
to the previous sentence, an agreement under
this section shall require that a manufacturer
provide and attest to such information as
specified by the Secretary as necessary.
‘‘(III) LIMITATION.—The term ‘specified small
manufacturer’ shall not include a manufacturer
described in subclause (I) if such manufacturer
is acquired after 2021 by another manufacturer
that is not a specified small manufacturer, effective
at the beginning of the plan year immediately
following such acquisition or, in the case of an
acquisition before 2025, effective January 1, 2025.
‘‘(iii) SPECIFIED SMALL MANUFACTURER PERCENT.—
In this subparagraph, the term ‘specified small manu-
facturer percent’ means, with respect to a year—
‘‘(I) for an applicable drug dispensed for an
applicable beneficiary who has not incurred costs,
as determined in accordance with section 1860D–
2(b)(4)(C), for covered part D drugs in the year
that are equal to or exceed the annual out-of-
pocket threshold specified in section 1860D–
2(b)(4)(B)(i) for the year—
‘‘(aa) for 2025, 99 percent;
‘‘(bb) for 2026, 98 percent;
‘‘(cc) for 2027, 95 percent;
‘‘(dd) for 2028, 92 percent; and
‘‘(ee) for 2029 and each subsequent year,
90 percent; and
‘‘(II) for an applicable drug dispensed for an
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applicable beneficiary who has incurred costs, as
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1887
determined in accordance with section 1860D–
2(b)(4)(C), for covered part D drugs in the year
that are equal to or exceed the annual out-of-
pocket threshold specified in section 1860D–
2(b)(4)(B)(i) for the year—
‘‘(aa) for 2025, 99 percent;
‘‘(bb) for 2026, 98 percent;
‘‘(cc) for 2027, 95 percent;
‘‘(dd) for 2028, 92 percent;
‘‘(ee) for 2029, 90 percent;
‘‘(ff) for 2030, 85 percent; and
‘‘(gg) for 2031 and each subsequent year,
80 percent.
‘‘(D) TOTAL EXPENDITURES.—For purposes of this para-
graph, the term ‘total expenditures’ includes, in the case
of expenditures with respect to part D, the total gross
covered prescription drug costs as defined in section
1860D–15(b)(3). The term ‘total expenditures’ excludes, in
the case of expenditures with respect to part B, expendi-
tures for a drug or biological that are bundled or packaged
into the payment for another service.
‘‘(E) SPECIAL CASE FOR CERTAIN CLAIMS.—
‘‘(i) CLAIMS SPANNING DEDUCTIBLE.—In the case
where the entire amount of the negotiated price of
an individual claim for an applicable drug with respect
to an applicable beneficiary does not fall above the
annual deductible specified in section 1860D–2(b)(1)
for the year, the manufacturer of the applicable drug
shall provide the discounted price under this section
on only the portion of the negotiated price of the
applicable drug that falls above such annual deduct-
ible.
‘‘(ii) CLAIMS SPANNING OUT-OF-POCKET
THRESHOLD.—In the case where the entire amount of
the negotiated price of an individual claim for an
applicable drug with respect to an applicable bene-
ficiary does not fall entirely below or entirely above
the annual out-of-pocket threshold specified in section
1860D–2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the discounted price—
‘‘(I) in accordance with subparagraph (A)(i) on
the portion of the negotiated price of the applicable
drug that falls below such threshold; and
‘‘(II) in accordance with subparagraph (A)(ii)
on the portion of such price of such drug that
falls at or above such threshold.
‘‘(5) MANUFACTURER.—The term ‘manufacturer’ means any
entity which is engaged in the production, preparation, propaga-
tion, 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 chem-
ical synthesis. Such term does not include a wholesale dis-
tributor of drugs or a retail pharmacy licensed under State
law.
‘‘(6) NEGOTIATED PRICE.—The term ‘negotiated price’ has
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the meaning given such term for purposes of section 1860D–
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136 STAT. 1888 PUBLIC LAW 117–169—AUG. 16, 2022
2(d)(1)(B), and, with respect to an applicable drug, such nego-
tiated price shall include any dispensing fee and, if applicable,
any vaccine administration fee for the applicable drug.
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG PLAN.—The
term ‘qualified retiree prescription drug plan’ has the meaning
given such term in section 1860D–22(a)(2).
42 USC ‘‘SEC. 1860D–14D. SELECTED DRUG SUBSIDY PROGRAM.
1395w–114d.
‘‘With respect to covered part D drugs that would be applicable
drugs (as defined in section 1860D–14C(g)(2)) but for the application
of subparagraph (B) of such section, the Secretary shall provide
a process whereby, in the case of an applicable beneficiary (as
defined in section 1860D–14C(g)(1)) who, with respect to a year,
is enrolled in a prescription drug plan or is enrolled in an MA–
PD plan, has not incurred costs that are equal to or exceed the
annual out-of-pocket threshold specified in section 1860D–
2(b)(4)(B)(i), and is dispensed such a drug, the Secretary (periodi-
cally and on a timely basis) provides the PDP sponsor or the
MA organization offering the plan, a subsidy with respect to such
drug that is equal to 10 percent of the negotiated price (as defined
in section 1860D–14C(g)(6)) of such drug.’’.
(2) SUNSET OF MEDICARE COVERAGE GAP DISCOUNT PRO-
GRAM.—Section 1860D–14A of the Social Security Act (42 U.S.C.
1395w–114a) is amended—
(A) in subsection (a), in the first sentence, by striking
‘‘The Secretary’’ and inserting ‘‘Subject to subsection (h),
the Secretary’’; and
(B) by adding at the end the following new subsection:
‘‘(h) SUNSET OF PROGRAM.—
‘‘(1) IN GENERAL.—The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2025,
and, subject to paragraph (2), agreements under this section
shall be terminated as of such date.
‘‘(2) CONTINUED APPLICATION FOR APPLICABLE DRUGS DIS-
PENSED PRIOR TO SUNSET.—The provisions of this section
(including all responsibilities and duties) shall continue to apply
on and after January 1, 2025, with respect to applicable drugs
dispensed prior to such date.’’.
(3) SELECTED DRUG SUBSIDY PAYMENTS FROM MEDICARE
PRESCRIPTION DRUG ACCOUNT.—Section 1860D–16(b)(1) of the
Social Security Act (42 U.S.C. 1395w–116(b)(1)) is amended—
(A) in subparagraph (C), by striking ‘‘and’’ at the end;
(B) in subparagraph (D), by striking the period at
the end and inserting ‘‘; and’’; and
(C) by adding at the end the following new subpara-
graph:
‘‘(E) payments under section 1860D–14D (relating to
selected drug subsidy payments).’’.
(d) MEDICARE PART D PREMIUM STABILIZATION.—
(1) 2024 THROUGH 2029.—Section 1860D–13 of the Social
Security Act (42 U.S.C. 1395w–113) is amended—
(A) in subsection (a)—
(i) in paragraph (1)(A), by inserting ‘‘or (8) (as
applicable)’’ after ‘‘paragraph (2)’’;
(ii) in paragraph (2), in the matter preceding
subparagraph (A), by striking ‘‘The base’’ and inserting
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‘‘Subject to paragraph (8), the base’’;
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1889
(iii) in paragraph (7)—
(I) in subparagraph (B)(ii), by inserting ‘‘or
(8) (as applicable)’’ after ‘‘paragraph (2)’’; and
(II) in subparagraph (E)(i), by inserting ‘‘or
(8) (as applicable)’’ after ‘‘paragraph (2)’’; and
(iv) by adding at the end the following new para-
graph:
‘‘(8) PREMIUM STABILIZATION.— Time period.
‘‘(A) IN GENERAL.—The base beneficiary premium
under this paragraph for a prescription drug plan for a
month in 2024 through 2029 shall be computed as follows:
‘‘(i) 2024.—The base beneficiary premium for a
month in 2024 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under paragraph (2) for a month in 2023 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2024 that
would have applied if this paragraph had not been
enacted.
‘‘(ii) 2025.—The base beneficiary premium for a
month in 2025 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under clause (i) for a month in 2024 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2025 that
would have applied if this paragraph had not been
enacted.
‘‘(iii) 2026.—The base beneficiary premium for a
month in 2026 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under clause (ii) for a month in 2025 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2026 that
would have applied if this paragraph had not been
enacted.
‘‘(iv) 2027.—The base beneficiary premium for a
month in 2027 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under clause (iii) for a month in 2026 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2027 that
would have applied if this paragraph had not been
enacted.
‘‘(v) 2028.—The base beneficiary premium for a
month in 2028 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under clause (iv) for a month in 2027 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2028 that
would have applied if this paragraph had not been
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enacted.
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136 STAT. 1890 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(vi) 2029.—The base beneficiary premium for a
month in 2029 shall be equal to the lesser of—
‘‘(I) the base beneficiary premium computed
under clause (v) for a month in 2028 increased
by 6 percent; or
‘‘(II) the base beneficiary premium computed
under paragraph (2) for a month in 2029 that
would have applied if this paragraph had not been
enacted.
‘‘(B) CLARIFICATION REGARDING 2030 AND SUBSEQUENT
YEARS.—The base beneficiary premium for a month in 2030
or a subsequent year shall be computed under paragraph
(2) without regard to this paragraph.’’; and
(B) in subsection (b)(3)(A)(ii), by striking ‘‘subsection
(a)(2)’’ and inserting ‘‘paragraph (2) or (8) of subsection
(a) (as applicable)’’.
(2) ADJUSTMENT TO BENEFICIARY PREMIUM PERCENTAGE FOR
2030 AND SUBSEQUENT YEARS.—Section 1860D–13(a) of the
Social Security Act (42 U.S.C. 1395w–113(a)), as amended by
paragraph (1), is amended—
(A) in paragraph (3)(A), by inserting ‘‘(or, for 2030
and each subsequent year, the percent specified under para-
graph (9))’’ after ‘‘25.5 percent’’; and
(B) by adding at the end the following new paragraph:
Time periods. ‘‘(9) PERCENT SPECIFIED.—
Determination. ‘‘(A) IN GENERAL.—Subject to subparagraph (B), for
purposes of paragraph (3)(A), the percent specified under
this paragraph for 2030 and each subsequent year is the
percent that the Secretary determines is necessary to
ensure that the base beneficiary premium computed under
paragraph (2) for a month in 2030 is equal to the lesser
of—
‘‘(i) the base beneficiary premium computed under
paragraph (8)(A)(vi) for a month in 2029 increased
by 6 percent; or
‘‘(ii) the base beneficiary premium computed under
paragraph (2) for a month in 2030 that would have
applied if this paragraph had not been enacted.
‘‘(B) FLOOR.—The percent specified under subpara-
graph (A) may not be less than 20 percent.’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 1854(b)(2)(B) of the Social Security Act
42 U.S.C. 1395w–24(b)(2)(B)) is amended by striking ‘‘sec-
tion 1860D–13(a)(2)’’ and inserting ‘‘paragraph (2) or (8)
(as applicable) of section 1860D–13(a)’’.
(B) Section 1860D–11(g)(6) of the Social Security Act
(42 U.S.C. 1395w–111(g)(6)) is amended by inserting ‘‘(or,
for 2030 and each subsequent year, the percent specified
under section 1860D–13(a)(9))’’ after ‘‘25.5 percent’’.
(C) Section 1860D–13(a)(7)(B)(i) of the Social Security
Act (42 U.S.C. 1395w–113(a)(7)(B)(i)) is amended—
(i) in subclause (I), by inserting ‘‘(or, for 2030 and
each subsequent year, the percent specified under para-
graph (9))’’ after ‘‘25.5 percent’’; and
(ii) in subclause (II), by inserting ‘‘(or, for 2030
and each subsequent year, the percent specified under
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paragraph (9))’’ after ‘‘25.5 percent’’.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1891
(D) Section 1860D–15(a) of the Social Security Act
(42 U.S.C. 1395w–115(a)) is amended—
(i) in the matter preceding paragraph (1), by
inserting ‘‘(or, for each of 2024 through 2029, the per-
cent applicable as a result of the application of section
1860D–13(a)(8), or, for 2030 and each subsequent year,
100 percent minus the percent specified under section
1860D–13(a)(9))’’ after ‘‘74.5 percent’’; and
(ii) in paragraph (1)(B), by striking ‘‘paragraph
(2) of section 1860D–13(a)’’ and inserting ‘‘paragraph
(2) or (8) of section 1860D–13(a) (as applicable)’’.
(e) CONFORMING AMENDMENTS.— Time periods.
(1) Section 1860D–2 of the Social Security Act (42 U.S.C.
1395w–102) is amended—
(A) in subsection (a)(2)(A)(i)(I), by striking ‘‘, or an
increase in the initial’’ and inserting ‘‘or, for a year pre-
ceding 2025, an increase in the initial’’;
(B) in subsection (c)(1)(C)—
(i) in the subparagraph heading, by striking ‘‘AT
INITIAL COVERAGE LIMIT’’; and
(ii) by inserting ‘‘for a year preceding 2025 or the
annual out-of-pocket threshold specified in subsection
(b)(4)(B) for the year for 2025 and each subsequent
year’’ after ‘‘subsection (b)(3) for the year’’ each place
it appears; and
(C) in subsection (d)(1)(A), by striking ‘‘or an initial’’
and inserting ‘‘or, for a year preceding 2025, an initial’’.
(2) Section 1860D–4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w–104(a)(4)(B)(i)) is amended by striking ‘‘the
initial’’ and inserting ‘‘for a year preceding 2025, the initial’’.
(3) Section 1860D–14(a) of the Social Security Act (42
U.S.C. 1395w–114(a)) is amended—
(A) in paragraph (1)—
(i) in subparagraph (C), by striking ‘‘The continu-
ation’’ and inserting ‘‘For a year preceding 2025, the
continuation’’;
(ii) in subparagraph (D)(iii), by striking ‘‘1860D–
2(b)(4)(A)(i)(I)’’ and inserting ‘‘1860D–
2(b)(4)(A)(i)(I)(aa)’’; and
(iii) in subparagraph (E), by striking ‘‘The elimi-
nation’’ and inserting ‘‘For a year preceding 2024, the
elimination’’; and
(B) in paragraph (2)(E), by striking ‘‘1860D–
2(b)(4)(A)(i)(I)’’ and inserting ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’.
(4) Section 1860D–21(d)(7) of the Social Security Act (42
U.S.C. 1395w–131(d)(7)) is amended by striking ‘‘section
1860D–2(b)(4)(B)(i)’’ and inserting ‘‘section 1860D–2(b)(4)(C)(i)’’.
(5) Section 1860D–22(a)(2)(A) of the Social Security Act
(42 U.S.C. 1395w–132(a)(2)(A)) is amended—
(A) by striking ‘‘the value of any discount’’ and
inserting the following: ‘‘the value of—
‘‘(i) for years prior to 2025, any discount’’;
(B) in clause (i), as inserted by subparagraph (A) of
this paragraph, by striking the period at the end and
inserting ‘‘; and’’; and
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(C) by adding at the end the following new clause:
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136 STAT. 1892 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(ii) for 2025 and each subsequent year, any dis-
count provided pursuant to section 1860D–14C.’’.
(6) Section 1860D–41(a)(6) of the Social Security Act (42
U.S.C. 1395w–151(a)(6)) is amended—
(A) by inserting ‘‘for a year before 2025’’ after ‘‘1860D–
2(b)(3)’’; and
(B) by inserting ‘‘for such year’’ before the period.
(7) Section 1860D–43 of the Social Security Act (42 U.S.C.
1395w–153) is amended—
(A) in subsection (a)—
(i) by striking paragraph (1) and inserting the
following:
‘‘(1) participate in—
‘‘(A) for 2011 through 2024, the Medicare coverage
gap discount program under section 1860D–14A; and
‘‘(B) for 2025 and each subsequent year, the manufac-
turer discount program under section 1860D–14C;’’;
(ii) by striking paragraph (2) and inserting the
following:
‘‘(2) have entered into and have in effect—
‘‘(A) for 2011 through 2024, an agreement described
in subsection (b) of section 1860D–14A with the Secretary;
and
‘‘(B) for 2025 and each subsequent year, an agreement
described in subsection (b) of section 1860D–14C with the
Secretary; and’’; and
(iii) in paragraph (3), by striking ‘‘such section’’
and inserting ‘‘section 1860D–14A’’; and
(B) by striking subsection (b) and inserting the fol-
lowing:
Applicability. ‘‘(b) EFFECTIVE DATE.—Paragraphs (1)(A), (2)(A), and (3) of
subsection (a) shall apply to covered part D drugs dispensed under
this part on or after January 1, 2011, and before January 1, 2025,
and paragraphs (1)(B) and (2)(B) of such subsection shall apply
to covered part D drugs dispensed under this part on or after
January 1, 2025.’’.
(8) Section 1927 of the Social Security Act (42 U.S.C. 1396r–
8) is amended—
(A) in subsection (c)(1)(C)(i)(VI), by inserting before
the period at the end the following: ‘‘or under the manufac-
turer discount program under section 1860D–14C’’; and
(B) in subsection (k)(1)(B)(i)(V), by inserting before the
period at the end the following: ‘‘or under section 1860D–
14C’’.
42 USC (f) IMPLEMENTATION FOR 2024 THROUGH 2026.—The Secretary
1395w–102 note. shall implement this section, including the amendments made by
this section, for 2024, 2025, and 2026 by program instruction or
other forms of program guidance.
Time periods. (g) FUNDING.—In addition to amounts otherwise available, there
are appropriated to the Centers for Medicare & Medicaid Services,
out of any money in the Treasury not otherwise appropriated,
$341,000,000 for fiscal year 2022, including $20,000,000 and
$65,000,000 to carry out the provisions of, including the amend-
ments made by, this section in fiscal years 2022 and 2023, respec-
tively, and $32,000,000 to carry out the provisions of, including
the amendments made by, this section in each of fiscal years 2024
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through 2031, to remain available until expended.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1893
SEC. 11202. MAXIMUM MONTHLY CAP ON COST-SHARING PAYMENTS
UNDER PRESCRIPTION DRUG PLANS AND MA–PD PLANS.
(a) IN GENERAL.—Section 1860D–2(b) of the Social Security
Act (42 U.S.C. 1395w–102(b)) is amended—
(1) in paragraph (2)—
(A) in subparagraph (A), by striking ‘‘and (D)’’ and
inserting ‘‘, (D), and (E)’’; and
(B) by adding at the end the following new subpara-
graph:
‘‘(E) MAXIMUM MONTHLY CAP ON COST-SHARING PAY-
MENTS.—
‘‘(i) IN GENERAL.—For plan years beginning on or Effective date.
after January 1, 2025, each PDP sponsor offering a
prescription drug plan and each MA organization
offering an MA–PD plan shall provide to any enrollee
of such plan, including an enrollee who is a subsidy
eligible individual (as defined in paragraph (3) of sec-
tion 1860D–14(a)), the option to elect with respect to
a plan year to pay cost-sharing under the plan in
monthly amounts that are capped in accordance with
this subparagraph.
‘‘(ii) DETERMINATION OF MAXIMUM MONTHLY CAP.—
For each month in the plan year for which an enrollee
in a prescription drug plan or an MA–PD plan has
made an election pursuant to clause (i), the PDP
sponsor or MA organization shall determine a max-
imum monthly cap (as defined in clause (iv)) for such
enrollee.
‘‘(iii) BENEFICIARY MONTHLY PAYMENTS.—With
respect to an enrollee who has made an election pursu-
ant to clause (i), for each month described in clause
(ii), the PDP sponsor or MA organization shall bill
such enrollee an amount (not to exceed the maximum
monthly cap) for the out-of-pocket costs of such enrollee
in such month.
‘‘(iv) MAXIMUM MONTHLY CAP DEFINED.—In this
subparagraph, the term ‘maximum monthly cap’
means, with respect to an enrollee—
‘‘(I) for the first month for which the enrollee
has made an election pursuant to clause (i), an
amount determined by calculating—
‘‘(aa) the annual out-of-pocket threshold
specified in paragraph (4)(B) minus the
incurred costs of the enrollee as described in
paragraph (4)(C); divided by
‘‘(bb) the number of months remaining in
the plan year; and
‘‘(II) for a subsequent month, an amount deter-
mined by calculating—
‘‘(aa) the sum of any remaining out-of-
pocket costs owed by the enrollee from a pre-
vious month that have not yet been billed
to the enrollee and any additional out-of-
pocket costs incurred by the enrollee; divided
by
‘‘(bb) the number of months remaining in
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the plan year.
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136 STAT. 1894 PUBLIC LAW 117–169—AUG. 16, 2022
Applicability. ‘‘(v) ADDITIONAL REQUIREMENTS.—The following
requirements shall apply with respect to the option
to make an election pursuant to clause (i) under this
subparagraph:
‘‘(I) SECRETARIAL RESPONSIBILITIES.—The Sec-
retary shall provide information to part D eligible
individuals on the option to make such election
through educational materials, including through
the notices provided under section 1804(a).
‘‘(II) TIMING OF ELECTION.—An enrollee in a
prescription drug plan or an MA–PD plan may
make such an election—
‘‘(aa) prior to the beginning of the plan
year; or
‘‘(bb) in any month during the plan year.
‘‘(III) PDP SPONSOR AND MA ORGANIZATION
RESPONSIBILITIES.—Each PDP sponsor offering a
prescription drug plan or MA organization offering
an MA–PD plan—
‘‘(aa) may not limit the option for an
enrollee to make such an election to certain
covered part D drugs;
Notification. ‘‘(bb) shall, prior to the plan year, notify
prospective enrollees of the option to make
such an election in promotional materials;
‘‘(cc) shall include information on such
option in enrollee educational materials;
Notification. ‘‘(dd) shall have in place a mechanism to
notify a pharmacy during the plan year when
an enrollee incurs out-of-pocket costs with
respect to covered part D drugs that make
it likely the enrollee may benefit from making
such an election;
‘‘(ee) shall provide that a pharmacy, after
receiving a notification described in item (dd)
with respect to an enrollee, informs the
enrollee of such notification;
‘‘(ff) shall ensure that such an election
by an enrollee has no effect on the amount
paid to pharmacies (or the timing of such pay-
ments) with respect to covered part D drugs
dispensed to the enrollee; and
‘‘(gg) shall have in place a financial rec-
onciliation process to correct inaccuracies in
payments made by an enrollee under this
subparagraph with respect to covered part D
drugs during the plan year.
‘‘(IV) FAILURE TO PAY AMOUNT BILLED.—If an
enrollee fails to pay the amount billed for a month
as required under this subparagraph—
‘‘(aa) the election of the enrollee pursuant
to clause (i) shall be terminated and the
enrollee shall pay the cost-sharing otherwise
applicable for any covered part D drugs subse-
quently dispensed to the enrollee up to the
annual out-of-pocket threshold specified in
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paragraph (4)(B); and
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1895
‘‘(bb) the PDP sponsor or MA organization
may preclude the enrollee from making an
election pursuant to clause (i) in a subsequent
plan year.
‘‘(V) CLARIFICATION REGARDING PAST DUE
AMOUNTS.—Nothing in this subparagraph shall be
construed as prohibiting a PDP sponsor or an MA
organization from billing an enrollee for an amount
owed under this subparagraph.
‘‘(VI) TREATMENT OF UNSETTLED BALANCES.—
Any unsettled balances with respect to amounts
owed under this subparagraph shall be treated
as plan losses and the Secretary shall not be liable
for any such balances outside of those assumed
as losses estimated in plan bids.’’; and
(2) in paragraph (4)—
(A) in subparagraph (C), by striking ‘‘subparagraph
(E)’’ and inserting ‘‘subparagraph (E) or subparagraph (F)’’;
and
(B) by adding at the end the following new subpara-
graph:
‘‘(F) INCLUSION OF COSTS PAID UNDER MAXIMUM
MONTHLY CAP OPTION.—In applying subparagraph (A), with
respect to an enrollee who has made an election pursuant
to clause (i) of paragraph (2)(E), costs shall be treated
as incurred if such costs are paid by a PDP sponsor or
an MA organization under the option provided under such
paragraph.’’.
(b) APPLICATION TO ALTERNATIVE PRESCRIPTION DRUG COV-
ERAGE.—Section 1860D–2(c) of the Social Security Act (42 U.S.C.
1395w–102(c)) is amended by adding at the end the following new
paragraph:
‘‘(4) SAME MAXIMUM MONTHLY CAP ON COST-SHARING.—The
maximum monthly cap on cost-sharing payments shall apply
to coverage with respect to an enrollee who has made an
election pursuant to clause (i) of subsection (b)(2)(E) under
the option provided under such subsection.’’.
(c) IMPLEMENTATION FOR 2025.—The Secretary shall implement 42 USC
this section, including the amendments made by this section, for 1395w–102 note.
2025 by program instruction or other forms of program guidance.
(d) FUNDING.—In addition to amounts otherwise available, Time period.
there are appropriated to the Centers for Medicare & Medicaid
Services, out of any money in the Treasury not otherwise appro-
priated, $10,000,000 for fiscal year 2023, to remain available until
expended, to carry out the provisions of, including the amendments
made by, this section.
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136 STAT. 1896 PUBLIC LAW 117–169—AUG. 16, 2022
PART 4—CONTINUED DELAY OF IMPLEMENTA-
TION OF PRESCRIPTION DRUG REBATE
RULE
42 USC SEC. 11301. EXTENSION OF MORATORIUM ON IMPLEMENTATION OF
1320a–7b note. RULE RELATING TO ELIMINATING THE ANTI-KICKBACK
STATUTE SAFE HARBOR PROTECTION FOR PRESCRIP-
TION DRUG REBATES.
Effective date. The Secretary of Health and Human Services shall not, prior
to January 1, 2032, implement, administer, or enforce the provisions
of the final rule published by the Office of the Inspector General
of the Department of Health and Human Services on November
30, 2020, and titled ‘‘Fraud and Abuse; Removal of Safe Harbor
Protection for Rebates Involving Prescription Pharmaceuticals and
Creation of New Safe Harbor Protection for Certain Point-of-Sale
Reductions in Price on Prescription Pharmaceuticals and Certain
Pharmacy Benefit Manager Service Fees’’ (85 Fed. Reg. 76666).
PART 5—MISCELLANEOUS
SEC. 11401. COVERAGE OF ADULT VACCINES RECOMMENDED BY THE
ADVISORY COMMITTEE ON IMMUNIZATION PRACTICES
UNDER MEDICARE PART D.
(a) ENSURING TREATMENT OF COST-SHARING AND DEDUCTIBLE
IS CONSISTENT WITH TREATMENT OF VACCINES UNDER MEDICARE
PART B.—Section 1860D–2 of the Social Security Act (42 U.S.C.
1395w–102), as amended by sections 11201 and 11202, is
amended—
(1) in subsection (b)—
(A) in paragraph (1)(A), by striking ‘‘The coverage’’
and inserting ‘‘Subject to paragraph (8), the coverage’’;
(B) in paragraph (2)—
(i) in subparagraph (A), by inserting ‘‘and para-
graph (8)’’ after ‘‘and (E)’’;
(ii) in subparagraph (C)(i), in the matter preceding
subclause (I), by striking ‘‘paragraph (4)’’ and inserting
‘‘paragraphs (4) and (8)’’; and
(iii) in subparagraph (D)(i), in the matter preceding
subclause (I), by striking ‘‘paragraph (4)’’ and inserting
‘‘paragraphs (4) and (8)’’;
(C) in paragraph (3)(A), in the matter preceding clause
(i), by striking ‘‘and (4)’’ and inserting ‘‘(4), and (8)’’;
(D) in paragraph (4)(A)(i), by striking ‘‘The coverage’’
and inserting ‘‘Subject to paragraph (8), the coverage’’;
and
(E) by adding at the end the following new paragraph:
‘‘(8) TREATMENT OF COST-SHARING FOR ADULT VACCINES REC-
OMMENDED BY THE ADVISORY COMMITTEE ON IMMUNIZATION
PRACTICES CONSISTENT WITH TREATMENT OF VACCINES UNDER
PART B.—
Effective date. ‘‘(A) IN GENERAL.—For plan years beginning on or after
January 1, 2023, with respect to an adult vaccine rec-
ommended by the Advisory Committee on Immunization
Practices (as defined in subparagraph (B))—
‘‘(i) the deductible under paragraph (1) shall not
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apply; and
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1897
‘‘(ii) there shall be no coinsurance or other cost-
sharing under this part with respect to such vaccine.
‘‘(B) ADULT VACCINES RECOMMENDED BY THE ADVISORY
COMMITTEE ON IMMUNIZATION PRACTICES.—For purposes of Definition.
this paragraph, the term ‘adult vaccine recommended by
the Advisory Committee on Immunization Practices’ means
a covered part D drug that is a vaccine licensed under
section 351 of the Public Health Service Act for use by
adult populations and administered in accordance with rec-
ommendations of the Advisory Committee on Immunization
Practices of the Centers for Disease Control and Preven-
tion.’’; and
(2) in subsection (c), by adding at the end the following
new paragraph:
‘‘(5) TREATMENT OF COST-SHARING FOR ADULT VACCINES REC-
OMMENDED BY THE ADVISORY COMMITTEE ON IMMUNIZATION
PRACTICES.—The coverage is in accordance with subsection
(b)(8).’’.
(b) CONFORMING AMENDMENTS TO COST-SHARING FOR LOW-
INCOME INDIVIDUALS.—Section 1860D–14(a) of the Social Security
Act (42 U.S.C. 1395w–114(a)), as amended by section 11201, is
amended—
(1) in paragraph (1)(D), in each of clauses (ii) and (iii),
by striking ‘‘In the case’’ and inserting ‘‘Subject to paragraph
(6), in the case’’;
(2) in paragraph (2)—
(A) in subparagraph (B), by striking ‘‘A reduction’’ and
inserting ‘‘Subject to section 1860D–2(b)(8), a reduction’’;
(B) in subparagraph (D), by striking ‘‘The substitution’’
and inserting ‘‘Subject to paragraph (6), the substitution’’;
and
(C) in subparagraph (E), by striking ‘‘subsection (c)’’
and inserting ‘‘paragraph (6) of this subsection and sub-
section (c)’’; and
(3) by adding at the end the following new paragraph:
‘‘(6) NO APPLICATION OF COST-SHARING OR DEDUCTIBLE FOR
ADULT VACCINES RECOMMENDED BY THE ADVISORY COMMITTEE
ON IMMUNIZATION PRACTICES.—For plan years beginning on Effective date.
or after January 1, 2023, with respect to an adult vaccine
recommended by the Advisory Committee on Immunization
Practices (as defined in section 1860D–2(b)(8)(B))—
‘‘(A) the deductible under section 1860D–2(b)(1) shall
not apply; and
‘‘(B) there shall be no cost-sharing under this section
with respect to such vaccine.’’.
(c) TEMPORARY RETROSPECTIVE SUBSIDY.—
(1) IN GENERAL.—Section 1860D–15 of the Social Security
Act (42 U.S.C. 1395w–115) is amended by adding at the end
the following new subsection:
‘‘(h) TEMPORARY RETROSPECTIVE SUBSIDY FOR REDUCTION IN
COST-SHARING AND DEDUCTIBLE FOR ADULT VACCINES REC-
OMMENDED BY THE ADVISORY COMMITTEE ON IMMUNIZATION PRAC-
TICES DURING 2023.—
‘‘(1) IN GENERAL.—In addition to amounts otherwise pay-
able under this section to a PDP sponsor of a prescription
drug plan or an MA organization offering an MA–PD plan,
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for plan year 2023, the Secretary shall provide the PDP sponsor
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136 STAT. 1898 PUBLIC LAW 117–169—AUG. 16, 2022
or MA organization offering the plan subsidies in an amount
equal to the aggregate reduction in cost-sharing and deductible
by reason of the application of section 1860D–2(b)(8) for individ-
uals under the plan during the year.
Deadline. ‘‘(2) TIMING.—The Secretary shall provide a subsidy under
paragraph (1), as applicable, not later than 18 months following
the end of the applicable plan year.’’.
(2) TREATMENT AS INCURRED COSTS.—Section 1860D–
2(b)(4)(C)(iii)(I) of the Social Security Act (42 U.S.C. 1395w–
102(b)(4)(C)(iii)(I)), as amended by section 11201(a)(3)(C), is
amended—
(A) in item (cc), by striking ‘‘or’’ at the end; and
(B) by adding at the end the following new item:
‘‘(dd) under section 1860D–15(h); or’’.
42 USC (d) RULE OF CONSTRUCTION.—Nothing in this section shall be
1395w–102 note. construed as limiting coverage under part D of title XVIII of the
Social Security Act for vaccines that are not recommended by the
Advisory Committee on Immunization Practices.
42 USC (e) IMPLEMENTATION FOR 2023 THROUGH 2025.—The Secretary
1395w–102 note. shall implement this section, including the amendments made by
this section, for 2023, 2024, and 2025, by program instruction
or other forms of program guidance.
SEC. 11402. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS
DURING INITIAL PERIOD.
Section 1847A(c)(4) of the Social Security Act (42 U.S.C. 1395w–
3a(c)(4)) is amended—
(1) in each of subparagraphs (A) and (B), by redesignating
clauses (i) and (ii) as subclauses (I) and (II), respectively, and
moving such subclauses 2 ems to the right;
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii) and moving such clauses 2 ems to the right;
(3) by striking ‘‘UNAVAILABLE.—In the case’’ and inserting
‘‘UNAVAILABLE.—
‘‘(A) IN GENERAL.—Subject to subparagraph (B), in the
case’’; and
(4) by adding at the end the following new subparagraph:
‘‘(B) LIMITATION ON PAYMENT AMOUNT FOR BIOSIMILAR
Effective date. BIOLOGICAL PRODUCTS DURING INITIAL PERIOD.—In the case
of a biosimilar biological product furnished on or after
July 1, 2024, during the initial period described in subpara-
graph (A) with respect to the biosimilar biological product,
the amount payable under this section for the biosimilar
biological product is the lesser of the following:
‘‘(i) The amount determined under clause (ii) of
such subparagraph for the biosimilar biological
product.
‘‘(ii) The amount determined under subsection
(b)(1)(B) for the reference biological product.’’.
SEC. 11403. TEMPORARY INCREASE IN MEDICARE PART B PAYMENT
FOR CERTAIN BIOSIMILAR BIOLOGICAL PRODUCTS.
Section 1847A(b)(8) of the Social Security Act (42 U.S.C. 1395w–
3a(b)(8)) is amended—
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and moving the margin of each such
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redesignated clause 2 ems to the right;
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1899
(2) by striking ‘‘PRODUCT.—The amount’’ and inserting the
following: ‘‘PRODUCT.—
‘‘(A) IN GENERAL.—Subject to subparagraph (B), the
amount’’; and
(3) by adding at the end the following new subparagraph:
‘‘(B) TEMPORARY PAYMENT INCREASE.— Time periods.
‘‘(i) IN GENERAL.—In the case of a qualifying bio-
similar biological product that is furnished during the
applicable 5-year period for such product, the amount
specified in this paragraph for such product with
respect to such period is the sum determined under
subparagraph (A), except that clause (ii) of such
subparagraph shall be applied by substituting ‘8 per-
cent’ for ‘6 percent’.
‘‘(ii) APPLICABLE 5-YEAR PERIOD.—For purposes of
clause (i), the applicable 5-year period for a qualifying
biosimilar biological product is—
‘‘(I) in the case of such a product for which Effective date.
payment was made under this paragraph as of
September 30, 2022, the 5-year period beginning
on October 1, 2022; and
‘‘(II) in the case of such a product for which
payment is first made under this paragraph during
a calendar quarter during the period beginning
October 1, 2022, and ending December 31, 2027,
the 5-year period beginning on the first day of
such calendar quarter during which such payment
is first made.
‘‘(iii) QUALIFYING BIOSIMILAR BIOLOGICAL PRODUCT
DEFINED.—For purposes of this subparagraph, the term
‘qualifying biosimilar biological product’ means a bio-
similar biological product described in paragraph (1)(C)
with respect to which—
‘‘(I) in the case of a product described in clause
(ii)(I), the average sales price under paragraph
(8)(A)(i) for a calendar quarter during the 5-year
period described in such clause is not more than
the average sales price under paragraph (4)(A)
for such quarter for the reference biological
product; and
‘‘(II) in the case of a product described in
clause (ii)(II), the average sales price under para-
graph (8)(A)(i) for a calendar quarter during the
5-year period described in such clause is not more
than the average sales price under paragraph
(4)(A) for such quarter for the reference biological
product.’’.
SEC. 11404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUBSIDIES Effective date.
UNDER PART D OF THE MEDICARE PROGRAM.
Section 1860D–14(a) of the Social Security Act (42 U.S.C.
1395w–114(a)), as amended by sections 11201 and 11401, is
amended—
(1) in the subsection heading, by striking ‘‘INDIVIDUALS’’
and all that follows through ‘‘LINE’’ and inserting ‘‘CERTAIN
INDIVIDUALS’’;
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(2) in paragraph (1)—
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136 STAT. 1900 PUBLIC LAW 117–169—AUG. 16, 2022
(A) by striking the paragraph heading and inserting
‘‘INDIVIDUALS WITH CERTAIN LOW INCOMES’’; and
(B) in the matter preceding subparagraph (A)—
(i) by inserting ‘‘(or, with respect to a plan year
beginning on or after January 1, 2024, 150 percent)’’
after ‘‘135 percent’’; and
(ii) by inserting ‘‘(or, with respect to a plan year
beginning on or after January 1, 2024, paragraph
(3)(E))’’ after ‘‘the resources requirement described in
paragraph (3)(D)’’; and
(3) in paragraph (2)—
(A) by striking the paragraph heading and inserting
‘‘OTHER LOW-INCOME INDIVIDUALS’’; and
(B) in the matter preceding subparagraph (A), by
striking ‘‘In the case of a subsidy’’ and inserting ‘‘With
respect to a plan year beginning before January 1, 2024,
in the case of a subsidy’’.
SEC. 11405. IMPROVING ACCESS TO ADULT VACCINES UNDER MED-
ICAID AND CHIP.
(a) MEDICAID.—
(1) REQUIRING COVERAGE OF ADULT VACCINATIONS.—
(A) IN GENERAL.—Section 1902(a)(10)(A) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)) is amended in
the matter preceding clause (i) by inserting ‘‘(13)(B),’’ after
‘‘(5),’’.
(B) MEDICALLY NEEDY.—Section 1902(a)(10)(C)(iv) of
such Act (42 U.S.C. 1396a(a)(10)(C)(iv)) is amended by
inserting ‘‘, (13)(B),’’ after ‘‘(5)’’.
(2) NO COST SHARING FOR VACCINATIONS.—
(A) GENERAL COST-SHARING LIMITATIONS.—Section
1916 of the Social Security Act (42 U.S.C. 1396o) is
amended—
(i) in subsection (a)(2)—
(I) in subparagraph (G), by inserting a comma
after ‘‘State plan’’;
(II) in subparagraph (H), by striking ‘‘; or’’
and inserting a comma;
(III) in subparagraph (I), by striking ‘‘; and’’
and inserting ‘‘, or’’; and
(IV) by adding at the end the following new
subparagraph:
‘‘(J) vaccines described in section 1905(a)(13)(B) and
the administration of such vaccines; and’’; and
(ii) in subsection (b)(2)—
(I) in subparagraph (G), by inserting a comma
after ‘‘State plan’’;
(II) in subparagraph (H), by striking ‘‘; or’’
and inserting a comma;
(III) in subparagraph (I), by striking ‘‘; and’’
and inserting ‘‘, or’’; and
(IV) by adding at the end the following new
subparagraph:
‘‘(J) vaccines described in section 1905(a)(13)(B) and
the administration of such vaccines; and’’.
(B) APPLICATION TO ALTERNATIVE COST SHARING.—Sec-
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tion 1916A(b)(3)(B) of the Social Security Act (42 U.S.C.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1901
1396o–1(b)(3)(B)) is amended by adding at the end the
following new clause:
‘‘(xiv) Vaccines described in section 1905(a)(13)(B)
and the administration of such vaccines.’’.
(3) INCREASED FMAP FOR ADULT VACCINES AND THEIR
ADMINISTRATION.—Section 1905(b) of the Social Security Act
(42 U.S.C. 1396d(b)) is amended—
(A) by striking ‘‘and (5)’’ and inserting ‘‘(5)’’;
(B) by striking ‘‘services and vaccines described in sub-
paragraphs (A) and (B) of subsection (a)(13), and prohibits
cost-sharing for such services and vaccines’’ and inserting
‘‘services described in subsection (a)(13)(A), and prohibits
cost-sharing for such services’’;
(C) by striking ‘‘medical assistance for such services
and vaccines’’ and inserting ‘‘medical assistance for such
services’’; and
(D) by inserting ‘‘, and (6) during the first 8 fiscal Time periods.
quarters beginning on or after the effective date of this
clause, in the case of a State which, as of the date of
enactment of the Act titled ‘An Act to provide for reconcili-
ation pursuant to title II of S. Con. Res. 14’, provides
medical assistance for vaccines described in subsection
(a)(13)(B) and their administration and prohibits cost-
sharing for such vaccines, the Federal medical assistance
percentage, as determined under this subsection and sub-
section (y), shall be increased by 1 percentage point with
respect to medical assistance for such vaccines and their
administration’’ before the first period.
(b) CHIP.—
(1) REQUIRING COVERAGE OF ADULT VACCINATIONS.—Section
2103(c) of the Social Security Act (42 U.S.C. 1397cc(c)) is
amended by adding at the end the following paragraph:
‘‘(12) REQUIRED COVERAGE OF APPROVED, RECOMMENDED
ADULT VACCINES AND THEIR ADMINISTRATION.—Regardless of
the type of coverage elected by a State under subsection (a),
if the State child health plan or a waiver of such plan provides
child health assistance or pregnancy-related assistance (as
defined in section 2112) to an individual who is 19 years of
age or older, such assistance shall include coverage of vaccines
described in section 1905(a)(13)(B) and their administration.’’.
(2) NO COST-SHARING FOR VACCINATIONS.—Section
2103(e)(2) of such Act (42 U.S.C. 1397cc(e)(2)) is amended by
inserting ‘‘vaccines described in subsection (c)(12) (and the
administration of such vaccines),’’ after ‘‘in vitro diagnostic
products described in subsection (c)(10) (and administration
of such products),’’.
(c) EFFECTIVE DATE.—The amendments made by this section Applicability.
take effect on the 1st day of the 1st fiscal quarter that begins 42 USC 1396a
on or after the date that is 1 year after the date of enactment note.
of this Act and shall apply to expenditures made under a State
plan or waiver of such plan under title XIX of the Social Security
Act (42 U.S.C. 1396 through 1396w–6) or under a State child
health plan or waiver of such plan under title XXI of such Act
(42 U.S.C. 1397aa through 1397mm) on or after such effective
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date.
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136 STAT. 1902 PUBLIC LAW 117–169—AUG. 16, 2022
SEC. 11406. APPROPRIATE COST-SHARING FOR COVERED INSULIN
PRODUCTS UNDER MEDICARE PART D.
(a) IN GENERAL.—Section 1860D–2 of the Social Security Act
(42 U.S.C. 1395w–102), as amended by sections 11201, 11202, and
11401, is amended—
(1) in subsection (b)—
(A) in paragraph (1)(A), by striking ‘‘paragraph (8)’’
and inserting ‘‘paragraphs (8) and (9)’’;
(B) in paragraph (2)—
(i) in subparagraph (A), by striking ‘‘paragraph
(8)’’ and inserting ‘‘paragraphs (8) and (9)’’;
(ii) in subparagraph (C)(i), in the matter preceding
subclause (I), by striking ‘‘and (8)’’ and inserting ‘‘,
(8), and (9)’’; and
(iii) in subparagraph (D)(i), in the matter preceding
subclause (I), by striking ‘‘and (8)’’ and inserting ‘‘,
(8), and (9)’’;
(C) in paragraph (3)(A), in the matter preceding clause
(i), by striking ‘‘and (8)’’ and inserting ‘‘(8), and (9)’’;
(D) in paragraph (4)(A)(i), by striking ‘‘paragraph (8)’’
and inserting ‘‘paragraphs (8) and (9)’’; and
(E) by adding at the end the following new paragraph:
‘‘(9) TREATMENT OF COST-SHARING FOR COVERED INSULIN
PRODUCTS.—
Time periods. ‘‘(A) NO APPLICATION OF DEDUCTIBLE.—For plan year
2023 and subsequent plan years, the deductible under para-
graph (1) shall not apply with respect to any covered insulin
product.
‘‘(B) APPLICATION OF COST-SHARING.—
‘‘(i) PLAN YEARS 2023 AND 2024.—For plan years
2023 and 2024, the coverage provides benefits for any
covered insulin product, regardless of whether an indi-
vidual has reached the initial coverage limit under
paragraph (3) or the out-of-pocket threshold under
paragraph (4), with cost-sharing for a month’s supply
that does not exceed the applicable copayment amount.
‘‘(ii) PLAN YEAR 2025 AND SUBSEQUENT PLAN
YEARS.—For a plan year beginning on or after January
1, 2025, the coverage provides benefits for any covered
insulin product, prior to an individual reaching the
out-of-pocket threshold under paragraph (4), with cost-
sharing for a month’s supply that does not exceed
the applicable copayment amount.
Definition. ‘‘(C) COVERED INSULIN PRODUCT.—In this paragraph,
the term ‘covered insulin product’ means an insulin product
that is a covered part D drug covered under the prescription
drug plan or MA–PD plan that is approved under section
505 of the Federal Food, Drug, and Cosmetic Act or licensed
under section 351 of the Public Health Service Act and
marketed pursuant to such approval or licensure, including
any covered insulin product that has been deemed to be
licensed under section 351 of the Public Health Service
Act pursuant to section 7002(e)(4) of the Biologics Price
Competition and Innovation Act of 2009 and marketed
pursuant to such section.
Definition. ‘‘(D) APPLICABLE COPAYMENT AMOUNT.—In this para-
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graph, the term ‘applicable copayment amount’ means, with
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1903
respect to a covered insulin product under a prescription
drug plan or an MA–PD plan dispensed—
‘‘(i) during plan years 2023, 2024, and 2025, $35;
and
‘‘(ii) during plan year 2026 and each subsequent
plan year, the lesser of—
‘‘(I) $35;
‘‘(II) 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; or
‘‘(III) an amount equal to 25 percent of the
negotiated price of the covered insulin product
under the prescription drug plan or MA–PD plan.
‘‘(E) SPECIAL RULE FOR FIRST 3 MONTHS OF 2023.—With Reimbursement.
respect to a month’s supply of a covered insulin product Deadline.
dispensed during the period beginning on January 1, 2023,
and ending on March 31, 2023, a PDP sponsor offering
a prescription drug plan or an MA organization offering
an MA–PD plan shall reimburse an enrollee within 30
days for any cost-sharing paid by such enrollee that exceeds
the cost-sharing applied by the prescription drug plan or
MA–PD plan under subparagraph (B)(i) at the point-of-
sale for such month’s supply.’’; and
(2) in subsection (c), by adding at the end the following
new paragraph:
‘‘(6) TREATMENT OF COST-SHARING FOR COVERED INSULIN
PRODUCTS.—The coverage is provided in accordance with sub-
section (b)(9).’’.
(b) CONFORMING AMENDMENTS TO COST-SHARING FOR LOW-
INCOME INDIVIDUALS.—Section 1860D–14(a) of the Social Security
Act (42 U.S.C. 1395w–114(a)), as amended by sections 11201, 11401,
and 11404, is amended—
(1) in paragraph (1)— Time periods.
(A) in subparagraph (D)(iii), by adding at the end the
following new sentence: ‘‘For plan year 2023 and subse-
quent plan years, the copayment amount applicable under
the preceding sentence to a month’s supply of a covered
insulin product (as defined in section 1860D–2(b)(9)(C))
dispensed to the individual may not exceed the applicable
copayment amount for the product under the prescription
drug plan or MA–PD plan in which the individual is
enrolled.’’; and
(B) in subparagraph (E), by inserting the following
before the period at the end: ‘‘or under section 1860D–
2(b)(9) in the case of a covered insulin product (as defined
in subparagraph (C) of such section)’’; and
(2) in paragraph (2)—
(A) in subparagraph (B), by striking ‘‘section 1860D–
2(b)(8)’’ and inserting ‘‘paragraphs (8) and (9) of section
1860D–2(b)’’;
(B) in subparagraph (D), by adding at the end the
following new sentence: ‘‘For plan year 2023, the amount
of the coinsurance applicable under the preceding sentence
to a month’s supply of a covered insulin product (as defined
in section 1860D–2(b)(9)(C)) dispensed to the individual
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may not exceed the applicable copayment amount for the
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136 STAT. 1904 PUBLIC LAW 117–169—AUG. 16, 2022
product under the prescription drug plan or MA–PD plan
in which the individual is enrolled.’’; and
(C) in subparagraph (E), by adding at the end the
following new sentence: ‘‘For plan year 2023, the amount
of the copayment or coinsurance applicable under the pre-
ceding sentence to a month’s supply of a covered insulin
product (as defined in section 1860D–2(b)(9)(C)) dispensed
to the individual may not exceed the applicable copayment
amount for the product under the prescription drug plan
or MA–PD plan in which the individual is enrolled.’’.
(c) TEMPORARY RETROSPECTIVE SUBSIDY.—Section 1860D–15(h)
of the Social Security Act (42 U.S.C. 1395w–115(h)), as added
by section 11401(c), is amended—
(1) in the subsection heading, by inserting ‘‘AND INSULIN’’
after ‘‘PRACTICES’’; and
(2) in paragraph (1), by striking ‘‘section 1860D–2(b)(8)’’
and inserting ‘‘paragraph (8) or (9) of section 1860D–2(b)’’.
42 USC (d) IMPLEMENTATION FOR 2023 THROUGH 2025.—The Secretary
1395w–102 note. shall implement this section for plan years 2023, 2024, and 2025
by program instruction or other forms of program guidance.
(e) FUNDING.—In addition to amounts otherwise available, there
is appropriated to the Centers for Medicare & Medicaid Services,
out of any money in the Treasury not otherwise appropriated,
$1,500,000 for fiscal year 2022, to remain available until expended,
to carry out the provisions of, including the amendments made
by, this section.
Effective dates. SEC. 11407. LIMITATION ON MONTHLY COINSURANCE AND ADJUST-
MENTS TO SUPPLIER PAYMENT UNDER MEDICARE PART
B FOR INSULIN FURNISHED THROUGH DURABLE MED-
ICAL EQUIPMENT.
(a) WAIVER OF DEDUCTIBLE.—The first sentence of section
1833(b) of the Social Security Act (42 U.S.C. 1395l(b)) is amended—
(1) by striking ‘‘and (12)’’ and inserting ‘‘(12)’’; and
(2) by inserting before the period the following: ‘‘, and
(13) such deductible shall not apply with respect to insulin
furnished on or after July 1, 2023, through an item of durable
medical equipment covered under section 1861(n).’’.
(b) COINSURANCE.—
(1) IN GENERAL.—Section 1833(a)(1)(S) of the Social Secu-
rity Act (42 U.S.C. 1395l(a)(1)(S)) is amended—
(A) by inserting ‘‘(i) except as provided in clause (ii),’’
after ‘‘(S)’’; and
(B) by inserting after ‘‘or 1847B),’’ the following: ‘‘and
(ii) with respect to insulin furnished on or after July 1,
2023, through an item of durable medical equipment cov-
ered under section 1861(n), the amounts paid shall be,
subject to the fourth sentence of this subsection, 80 percent
of the payment amount established under section 1847A
(or section 1847B, if applicable) for such insulin,’’.
(2) ADJUSTMENT TO SUPPLIER PAYMENTS; LIMITATION ON
MONTHLY COINSURANCE.—Section 1833(a) of the Social Security
Act (42 U.S.C. 1395l(a)) is amended, in the flush matter at
the end, by adding at the end the following new sentence:
‘‘The Secretary shall make such adjustments as may be nec-
essary to the amounts paid as specified under paragraph
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(1)(S)(ii) for insulin furnished on or after July 1, 2023, through
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1905
an item of durable medical equipment covered under section
1861(n), such that the amount of coinsurance payable by an
individual enrolled under this part for a month’s supply of
such insulin does not exceed $35.’’.
(c) IMPLEMENTATION.—The Secretary of Health and Human 42 USC 1395l
Services shall implement this section for 2023 by program instruc- note.
tion or other forms of program guidance.
SEC. 11408. SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR
INSULIN.
(a) IN GENERAL.—Paragraph (2) of section 223(c) of the Internal
Revenue Code of 1986 is amended by adding at the end the following 26 USC 223.
new subparagraph:
‘‘(G) SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR
CERTAIN INSULIN PRODUCTS.—
‘‘(i) IN GENERAL.—A plan shall not fail to be treated
as a high deductible health plan by reason of failing
to have a deductible for selected insulin products.
‘‘(ii) SELECTED INSULIN PRODUCTS.—For purposes Definitions.
of this subparagraph—
‘‘(I) IN GENERAL.—The term ‘selected insulin
products’ means any dosage form (such as vial,
pump, or inhaler dosage forms) of any different
type (such as rapid-acting, short-acting, inter-
mediate-acting, long-acting, ultra long-acting, and
premixed) of insulin.
‘‘(II) INSULIN.—The term ‘insulin’ means
insulin that is licensed under subsection (a) or
(k) of section 351 of the Public Health Service
Act (42 U.S.C. 262) and continues to be marketed
under such section, including any insulin product
that has been deemed to be licensed under section
351(a) of such Act pursuant to section 7002(e)(4)
of the Biologics Price Competition and Innovation
Act of 2009 (Public Law 111–148) and continues
to be marketed pursuant to such licensure.’’.
(b) EFFECTIVE DATE.—The amendment made by this section 26 USC 223 note.
shall apply to plan years beginning after December 31, 2022.
Subtitle C—Affordable Care Act Subsidies
SEC. 12001. IMPROVE AFFORDABILITY AND REDUCE PREMIUM COSTS
OF HEALTH INSURANCE FOR CONSUMERS.
(a) IN GENERAL.—Clause (iii) of section 36B(b)(3)(A) of the
Internal Revenue Code of 1986 is amended—
(1) by striking ‘‘in 2021 or 2022’’ and inserting ‘‘after
December 31, 2020, and before January 1, 2026’’, and
(2) by striking ‘‘2021 AND 2022’’ in the heading and inserting
‘‘2021 THROUGH 2025’’.
(b) EXTENSION THROUGH 2025 OF RULE TO ALLOW CREDIT TO
TAXPAYERS WHOSE HOUSEHOLD INCOME EXCEEDS 400 PERCENT OF
THE POVERTY LINE.—Section 36B(c)(1)(E) of the Internal Revenue
Code of 1986 is amended—
(1) by striking ‘‘in 2021 or 2022’’ and inserting ‘‘after
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December 31, 2020, and before January 1, 2026’’, and
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136 STAT. 1906 PUBLIC LAW 117–169—AUG. 16, 2022
(2) by striking ‘‘2021 AND 2022’’ in the heading and inserting
‘‘2021 THROUGH 2025’’.
26 USC 36B note. (c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2022.
Subtitle D—Energy Security
SEC. 13001. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this sub-
title an amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision
of the Internal Revenue Code of 1986.
PART 1—CLEAN ELECTRICITY AND REDUCING
CARBON EMISSIONS
SEC. 13101. EXTENSION AND MODIFICATION OF CREDIT FOR ELEC-
TRICITY PRODUCED FROM CERTAIN RENEWABLE
RESOURCES.
26 USC 45. (a) IN GENERAL.—The following provisions of section 45(d) are
each amended by striking ‘‘January 1, 2022’’ each place it appears
and inserting ‘‘January 1, 2025’’:
(1) Paragraph (2)(A).
(2) Paragraph (3)(A).
(3) Paragraph (6).
(4) Paragraph (7).
(5) Paragraph (9).
(6) Paragraph (11)(B).
(b) BASE CREDIT AMOUNT.—Section 45 is amended—
(1) in subsection (a)(1), by striking ‘‘1.5 cents’’ and inserting
‘‘0.3 cents’’, and
(2) in subsection (b)(2), by striking ‘‘1.5 cent’’ and inserting
‘‘0.3 cent’’.
(c) APPLICATION OF EXTENSION TO GEOTHERMAL AND SOLAR.—
Section 45(d)(4) is amended by striking ‘‘and which’’ and all that
follows through ‘‘January 1, 2022’’ and inserting ‘‘and the construc-
tion of which begins before January 1, 2025’’.
(d) EXTENSION OF ELECTION TO TREAT QUALIFIED FACILITIES
AS ENERGY PROPERTY.—Section 48(a)(5)(C)(ii) is amended by
striking ‘‘January 1, 2022’’ and inserting ‘‘January 1, 2025’’.
(e) APPLICATION OF EXTENSION TO WIND FACILITIES.—
(1) IN GENERAL.—Section 45(d)(1) is amended by striking
‘‘January 1, 2022’’ and inserting ‘‘January 1, 2025’’.
(2) APPLICATION OF PHASEOUT PERCENTAGE.—
(A) RENEWABLE ELECTRICITY PRODUCTION CREDIT.—
Section 45(b)(5) is amended by inserting ‘‘which is placed
in service before January 1, 2022’’ after ‘‘using wind to
produce electricity’’.
(B) ENERGY CREDIT.—Section 48(a)(5)(E) is amended
by inserting ‘‘placed in service before January 1, 2022,
and’’ before ‘‘treated as energy property’’.
(3) QUALIFIED OFFSHORE WIND FACILITIES UNDER ENERGY
CREDIT.—Section 48(a)(5)(F)(i) is amended by striking ‘‘offshore
wind facility’’ and all that follows and inserting the following:
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‘‘offshore wind facility, subparagraph (E) shall not apply.’’.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1907
(f) WAGE AND APPRENTICESHIP REQUIREMENTS.—Section 45(b) 26 USC 45.
is amended by adding at the end the following new paragraphs:
‘‘(6) INCREASED CREDIT AMOUNT FOR QUALIFIED FACILI-
TIES.—
‘‘(A) IN GENERAL.—In the case of any qualified facility
which satisfies the requirements of subparagraph (B), the
amount of the credit determined under subsection (a)
(determined after the application of paragraphs (1) through
(5) and without regard to this paragraph) shall be equal
to such amount multiplied by 5.
‘‘(B) QUALIFIED FACILITY REQUIREMENTS.—A qualified
facility meets the requirements of this subparagraph if
it is one of the following:
‘‘(i) A facility with a maximum net output of less
than 1 megawatt (as measured in alternating current).
‘‘(ii) A facility the construction of which begins Time period.
prior to the date that is 60 days after the Secretary Publication.
Guidelines.
publishes guidance with respect to the requirements
of paragraphs (7)(A) and (8).
‘‘(iii) A facility which satisfies the requirements
of paragraphs (7)(A) and (8).
‘‘(7) PREVAILING WAGE REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements described in this
subparagraph with respect to any qualified facility are
that the taxpayer shall ensure that any laborers and
mechanics employed by the taxpayer or any contractor
or subcontractor in—
‘‘(i) the construction of such facility, and
‘‘(ii) with respect to any taxable year, for any por- Determination.
tion of such taxable year which is within the period
described in subsection (a)(2)(A)(ii), the alteration or
repair of such facility,
shall be paid wages at rates not less than the prevailing
rates for construction, alteration, or repair of a similar
character in the locality in which such facility is located
as most recently determined by the Secretary of Labor,
in accordance with subchapter IV of chapter 31 of title
40, United States Code. For purposes of determining an Applicability.
increased credit amount under paragraph (6)(A) for a tax-
able year, the requirement under clause (ii) is applied
to such taxable year in which the alteration or repair
of the qualified facility occurs.’’
‘‘(B) CORRECTION AND PENALTY RELATED TO FAILURE
TO SATISFY WAGE REQUIREMENTS.—
‘‘(i) IN GENERAL.—In the case of any taxpayer
which fails to satisfy the requirement under subpara-
graph (A) with respect to the construction of any quali-
fied facility or with respect to the alteration or repair
of a facility in any year during the period described
in subparagraph (A)(ii), such taxpayer shall be deemed
to have satisfied such requirement under such subpara-
graph with respect to such facility for any year if,
with respect to any laborer or mechanic who was paid
wages at a rate below the rate described in such
subparagraph for any period during such year, such
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taxpayer—
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136 STAT. 1908 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(I) makes payment to such laborer or
mechanic in an amount equal to the sum of—
‘‘(aa) an amount equal to the difference
between—
‘‘(AA) the amount of wages paid to
such laborer or mechanic during such
period, and
‘‘(BB) the amount of wages required
to be paid to such laborer or mechanic
pursuant to such subparagraph during
such period, plus
‘‘(bb) interest on the amount determined
under item (aa) at the underpayment rate
established under section 6621 (determined by
substituting ‘6 percentage points’ for ‘3
percentage points’ in subsection (a)(2) of such
section) for the period described in such item,
and
‘‘(II) makes payment to the Secretary of a pen-
alty in an amount equal to the product of—
‘‘(aa) $5,000, multiplied by
‘‘(bb) the total number of laborers and
mechanics who were paid wages at a rate
below the rate described in subparagraph (A)
for any period during such year.
‘‘(ii) DEFICIENCY PROCEDURES NOT TO APPLY.—Sub-
chapter B of chapter 63 (relating to deficiency proce-
dures for income, estate, gift, and certain excise taxes)
shall not apply with respect to the assessment or collec-
tion of any penalty imposed by this paragraph.
Determination. ‘‘(iii) INTENTIONAL DISREGARD.—If the Secretary
Applicability. determines that any failure described in clause (i) is
due to intentional disregard of the requirements under
subparagraph (A), such clause shall be applied—
‘‘(I) in subclause (I), by substituting ‘three
times the sum’ for ‘the sum’, and
‘‘(II) in subclause (II), by substituting ‘$10,000’
for ‘5,000’ in item (aa) thereof.
Regulations. ‘‘(iv) LIMITATION ON PERIOD FOR PAYMENT.—Pursu-
Deadline. ant to rules issued by the Secretary, in the case of
a final determination by the Secretary with respect
to any failure by the taxpayer to satisfy the require-
ment under subparagraph (A), subparagraph (B)(i)
shall not apply unless the payments described in sub-
clauses (I) and (II) of such subparagraph are made
by the taxpayer on or before the date which is 180
days after the date of such determination.
‘‘(8) APPRENTICESHIP REQUIREMENTS.—The requirements
described in this paragraph with respect to the construction
of any qualified facility are as follows:
‘‘(A) LABOR HOURS.—
‘‘(i) PERCENTAGE OF TOTAL LABOR HOURS.—Tax-
payers shall ensure that, with respect to the construc-
tion of any qualified facility, not less than the
applicable percentage of the total labor hours of the
construction, alteration, or repair work (including such
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work performed by any contractor or subcontractor)
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1909
with respect to such facility shall, subject to subpara-
graph (B), be performed by qualified apprentices.
‘‘(ii) APPLICABLE PERCENTAGE.—For purposes of Effective dates.
clause (i), the applicable percentage shall be—
‘‘(I) in the case of a qualified facility the
construction of which begins before January 1,
2023, 10 percent,
‘‘(II) in the case of a qualified facility the
construction of which begins after December 31,
2022, and before January 1, 2024, 12.5 percent,
and
‘‘(III) in the case of a qualified facility the
construction of which begins after December 31,
2023, 15 percent.
‘‘(B) APPRENTICE TO JOURNEYWORKER RATIO.—The
requirement under subparagraph (A)(i) shall be subject
to any applicable requirements for apprentice-to-
journeyworker ratios of the Department of Labor or the
applicable State apprenticeship agency.
‘‘(C) PARTICIPATION.—Each taxpayer, contractor, or
subcontractor who employs 4 or more individuals to perform
construction, alteration, or repair work with respect to
the construction of a qualified facility shall employ 1 or
more qualified apprentices to perform such work.
‘‘(D) EXCEPTION.—
‘‘(i) IN GENERAL.—A taxpayer shall not be treated
as failing to satisfy the requirements of this paragraph
if such taxpayer—
‘‘(I) satisfies the requirements described in
clause (ii), or
‘‘(II) subject to clause (iii), in the case of any
failure by the taxpayer to satisfy the requirement
under subparagraphs (A) and (C) with respect to
the construction, alteration, or repair work on any
qualified facility to which subclause (I) does not
apply, makes payment to the Secretary of a penalty
in an amount equal to the product of—
‘‘(aa) $50, multiplied by
‘‘(bb) the total labor hours for which the
requirement described in such subparagraph
was not satisfied with respect to the construc-
tion, alteration, or repair work on such quali-
fied facility.
‘‘(ii) GOOD FAITH EFFORT.—For purposes of clause
(i), a taxpayer shall be deemed to have satisfied the
requirements under this paragraph with respect to
a qualified facility if such taxpayer has requested quali-
fied apprentices from a registered apprenticeship pro-
gram, as defined in section 3131(e)(3)(B), and—
‘‘(I) such request has been denied, provided
that such denial is not the result of a refusal
by the taxpayer or any contractors or subcontrac-
tors engaged in the performance of construction,
alteration, or repair work with respect to such
qualified facility to comply with the established
standards and requirements of the registered
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apprenticeship program, or
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136 STAT. 1910 PUBLIC LAW 117–169—AUG. 16, 2022
Deadline. ‘‘(II) the registered apprenticeship program
fails to respond to such request within 5 business
days after the date on which such registered
apprenticeship program received such request.
Determination. ‘‘(iii) INTENTIONAL DISREGARD.—If the Secretary
determines that any failure described in subclause
(i)(II) is due to intentional disregard of the require-
ments under subparagraphs (A) and (C), subclause
(i)(II) shall be applied by substituting ‘$500’ for ‘$50’
in item (aa) thereof.
‘‘(E) DEFINITIONS.—For purposes of this paragraph—
‘‘(i) LABOR HOURS.—The term ‘labor hours’—
‘‘(I) means the total number of hours devoted
to the performance of construction, alteration, or
repair work by any individual employed by the
taxpayer or by any contractor or subcontractor,
and
‘‘(II) excludes any hours worked by—
‘‘(aa) foremen,
‘‘(bb) superintendents,
‘‘(cc) owners, or
‘‘(dd) persons employed in a bona fide
executive, administrative, or professional
capacity (within the meaning of those terms
in part 541 of title 29, Code of Federal Regula-
tions).
‘‘(ii) QUALIFIED APPRENTICE.—The term ‘qualified
apprentice’ means an individual who is employed by
the taxpayer or by any contractor or subcontractor
and who is participating in a registered apprenticeship
program, as defined in section 3131(e)(3)(B).
Determination. ‘‘(9) REGULATIONS AND GUIDANCE.—The Secretary shall
issue such regulations or other guidance as the Secretary deter-
mines necessary to carry out the purposes of this subsection,
including regulations or other guidance which provides for
requirements for recordkeeping or information reporting for
purposes of administering the requirements of this subsection.’’.
(g) DOMESTIC CONTENT, PHASEOUT, AND ENERGY COMMU-
26 USC 45. NITIES.—Section 45(b), as amended by subsection (f), is amended—
(1) by redesignating paragraph (9) as paragraph (12), and
(2) by inserting after paragraph (8) the following:
‘‘(9) DOMESTIC CONTENT BONUS CREDIT AMOUNT.—
‘‘(A) IN GENERAL.—In the case of any qualified facility
which satisfies the requirement under subparagraph (B)(i),
the amount of the credit determined under subsection (a)
(determined after the application of paragraphs (1) through
(8)) shall be increased by an amount equal to 10 percent
of the amount so determined.
‘‘(B) REQUIREMENT.—
Certification. ‘‘(i) IN GENERAL.—The requirement described in
this clause is satisfied with respect to any qualified
facility if the taxpayer certifies to the Secretary (at
such time, and in such form and manner, as the Sec-
retary may prescribe) that any steel, iron, or manufac-
tured product which is a component of such facility
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(upon completion of construction) was produced in the
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1911
United States (as determined under section 661 of
title 49, Code of Federal Regulations).
‘‘(ii) STEEL AND IRON.—In the case of steel or iron, Applicability.
clause (i) shall be applied in a manner consistent with
section 661.5 of title 49, Code of Federal Regulations.
‘‘(iii) MANUFACTURED PRODUCT.—For purposes of
clause (i), the manufactured products which are compo-
nents of a qualified facility upon completion of
construction shall be deemed to have been produced
in the United States if not less than the adjusted
percentage (as determined under subparagraph (C))
of the total costs of all such manufactured products
of such facility are attributable to manufactured prod-
ucts (including components) which are mined, pro-
duced, or manufactured in the United States.
‘‘(C) ADJUSTED PERCENTAGE.—
‘‘(i) IN GENERAL.—Subject to subclause (ii), for pur-
poses of subparagraph (B)(iii), the adjusted percentage
shall be 40 percent.
‘‘(ii) OFFSHORE WIND FACILITY.—For purposes of
subparagraph (B)(iii), in the case of a qualified facility
which is an offshore wind facility, the adjusted percent-
age shall be 20 percent.
‘‘(10) PHASEOUT FOR ELECTIVE PAYMENT.—
‘‘(A) IN GENERAL.—In the case of a taxpayer making
an election under section 6417 with respect to a credit
under this section, the amount of such credit shall be
replaced with—
‘‘(i) the value of such credit (determined without
regard to this paragraph), multiplied by
‘‘(ii) the applicable percentage.
‘‘(B) 100 PERCENT APPLICABLE PERCENTAGE FOR CER-
TAIN QUALIFIED FACILITIES.—In the case of any qualified
facility—
‘‘(i) which satisfies the requirements under para-
graph (9)(B), or
‘‘(ii) with a maximum net output of less than 1
megawatt (as measured in alternating current),
the applicable percentage shall be 100 percent.
‘‘(C) PHASED DOMESTIC CONTENT REQUIREMENT.—Sub- Effective dates.
ject to subparagraph (D), in the case of any qualified facility
which is not described in subparagraph (B), the applicable
percentage shall be—
‘‘(i) if construction of such facility began before
January 1, 2024, 100 percent, and
‘‘(ii) if construction of such facility began in cal-
endar year 2024, 90 percent.
‘‘(D) EXCEPTION.—
‘‘(i) IN GENERAL.—For purposes of this paragraph,
the Secretary shall provide exceptions to the require-
ments under this paragraph if—
‘‘(I) the inclusion of steel, iron, or manufac-
tured products which are produced in the United
States increases the overall costs of construction
of qualified facilities by more than 25 percent,
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or
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136 STAT. 1912 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(II) relevant steel, iron, or manufactured
products are not produced in the United States
in sufficient and reasonably available quantities
or of a satisfactory quality.
‘‘(ii) APPLICABLE PERCENTAGE.—In any case in
which the Secretary provides an exception pursuant
to clause (i), the applicable percentage shall be 100
percent.
‘‘(11) SPECIAL RULE FOR QUALIFIED FACILITY LOCATED IN
ENERGY COMMUNITY.—
‘‘(A) IN GENERAL.—In the case of a qualified facility
which is located in an energy community, the credit deter-
mined under subsection (a) (determined after the applica-
tion of paragraphs (1) through (10), without the application
of paragraph (9)) shall be increased by an amount equal
to 10 percent of the amount so determined.
Definition. ‘‘(B) ENERGY COMMUNITY.—For purposes of this para-
graph, the term ‘energy community’ means—
‘‘(i) a brownfield site (as defined in subparagraphs
(A), (B), and (D)(ii)(III) of section 101(39) of the Com-
prehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. 9601(39))),
Determinations. ‘‘(ii) a metropolitan statistical area or non-metro-
politan statistical area which—
‘‘(I) has (or, at any time during the period
beginning after December 31, 2009, had) 0.17 per-
cent or greater direct employment or 25 percent
or greater local tax revenues related to the extrac-
tion, processing, transport, or storage of coal, oil,
or natural gas (as determined by the Secretary),
and
‘‘(II) has an unemployment rate at or above
the national average unemployment rate for the
previous year (as determined by the Secretary),
or
‘‘(iii) a census tract—
Effective dates. ‘‘(I) in which—
‘‘(aa) after December 31, 1999, a coal mine
has closed, or
‘‘(bb) after December 31, 2009, a coal-fired
electric generating unit has been retired, or
‘‘(II) which is directly adjoining to any census
tract described in subclause (I).’’.
26 USC 45. (h) CREDIT REDUCED FOR TAX-EXEMPT BONDS.—Section 45(b)(3)
is amended to read as follows:
‘‘(3) CREDIT REDUCED FOR TAX-EXEMPT BONDS.—The amount
of the credit determined under subsection (a) with respect to
any facility for any taxable year (determined after the applica-
tion of paragraphs (1) and (2)) shall be reduced by the amount
which is the product of the amount so determined for such
year and the lesser of 15 percent or a fraction—
‘‘(A) the numerator of which is the sum, for the taxable
year and all prior taxable years, of proceeds of an issue
of any obligations the interest on which is exempt from
tax under section 103 and which is used to provide
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financing for the qualified facility, and
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1913
‘‘(B) the denominator of which is the aggregate amount
of additions to the capital account for the qualified facility
for the taxable year and all prior taxable years.
The amounts under the preceding sentence for any taxable Determination.
year shall be determined as of the close of the taxable year.’’.
(i) ROUNDING ADJUSTMENT.—
(1) IN GENERAL.—Section 45(b)(2) is amended by striking 26 USC 45.
the second sentence and inserting the following: ‘‘If the 0.3
cent amount as increased under the preceding sentence is not
a multiple of 0.05 cent, such amount shall be rounded to the
nearest multiple of 0.05 cent. In any other case, if an amount
as increased under this paragraph is not a multiple of 0.1
cent, such amount shall be rounded to the nearest multiple
of 0.1 cent.’’.
(2) CONFORMING AMENDMENT.—Section 45(b)(4)(A) is
amended by striking ‘‘last sentence’’ and inserting ‘‘last two
sentences’’.
(j) HYDROPOWER.—
(1) ELIMINATION OF CREDIT RATE REDUCTION FOR QUALIFIED
HYDROELECTRIC PRODUCTION AND MARINE AND HYDROKINETIC
RENEWABLE ENERGY.—Section 45(b)(4)(A), as amended by the
preceding provisions of this section, is amended by striking
‘‘(7), (9), or (11)’’ and inserting ‘‘or (7)’’.
(2) MARINE AND HYDROKINETIC RENEWABLE ENERGY.—Sec-
tion 45 is amended—
(A) in subsection (c)(10)(A)—
(i) in clause (iii), by striking ‘‘or’’,
(ii) in clause (iv), by striking the period at the
end and inserting ‘‘, or’’ and
(iii) by adding at the end the following:
‘‘(v) pressurized water used in a pipeline (or similar
man-made water conveyance) which is operated—
‘‘(I) for the distribution of water for agricul-
tural, municipal, or industrial consumption, and
‘‘(II) not primarily for the generation of elec-
tricity.’’, and
(B) in subsection (d)(11)(A), by striking ‘‘150’’ and
inserting ‘‘25’’.
(k) EFFECTIVE DATES.— Applicability.
(1) IN GENERAL.—Except as provided in paragraphs (2) 26 USC 45 note.
and (3), the amendments made by this section shall apply
to facilities placed in service after December 31, 2021.
(2) CREDIT REDUCED FOR TAX-EXEMPT BONDS.—The amend-
ment made by subsection (h) shall apply to facilities the
construction of which begins after the date of enactment of
this Act.
(3) DOMESTIC CONTENT, PHASEOUT, ENERGY COMMUNITIES,
AND HYDROPOWER.—The amendments made by subsections (g)
and (j) shall apply to facilities placed in service after December
31, 2022.
SEC. 13102. EXTENSION AND MODIFICATION OF ENERGY CREDIT.
(a) EXTENSION OF CREDIT.—The following provisions of section
48 are each amended by striking ‘‘January 1, 2024’’ each place
it appears and inserting ‘‘January 1, 2025’’:
(1) Subsection (a)(2)(A)(i)(II).
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(2) Subsection (a)(3)(A)(ii).
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136 STAT. 1914 PUBLIC LAW 117–169—AUG. 16, 2022
(3) Subsection (c)(1)(D).
(4) Subsection (c)(2)(D).
(5) Subsection (c)(3)(A)(iv).
(6) Subsection (c)(4)(C).
(7) Subsection (c)(5)(D).
(b) FURTHER EXTENSION FOR CERTAIN ENERGY PROPERTY.—
26 USC 48. Section 48(a)(3)(A)(vii) is amended by striking ‘‘January 1, 2024’’
and inserting ‘‘January 1, 2035’’.
(c) PHASEOUT OF CREDIT.—Section 48(a) is amended by striking
paragraphs (6) and (7) and inserting the following new paragraph:
Effective dates. ‘‘(6) PHASEOUT FOR CERTAIN ENERGY PROPERTY.—In the
case of any qualified fuel cell property, qualified small wind
property, or energy property described in clause (i) or clause
(ii) of paragraph (3)(A) the construction of which begins after
December 31, 2019, and which is placed in service before
January 1, 2022, the energy percentage determined under para-
graph (2) shall be equal to 26 percent.’’.
(d) BASE ENERGY PERCENTAGE AMOUNT; PHASEOUT OF CERTAIN
ENERGY PROPERTY.—
(1) BASE ENERGY PERCENTAGE AMOUNT.—Section 48(a) is
amended—
(A) in paragraph (2)(A)—
(i) in clause (i), by striking ‘‘30 percent’’ and
inserting ‘‘6 percent’’, and
(ii) in clause (ii), by striking ‘‘10 percent’’ and
inserting ‘‘2 percent’’, and
(B) in paragraph (5)(A)(ii), by striking ‘‘30 percent’’
and inserting ‘‘6 percent’’.
(2) PHASEOUT OF CERTAIN ENERGY PROPERTY.—Section
48(a), as amended by the preceding provisions of this Act,
is amended by adding at the end the following new paragraph:
Effective dates. ‘‘(7) PHASEOUT FOR CERTAIN ENERGY PROPERTY.—In the
Time periods. case of any energy property described in clause (vii) of para-
graph (3)(A), the energy percentage determined under para-
graph (2) shall be equal to—
‘‘(A) in the case of any property the construction of
which begins before January 1, 2033, and which is placed
in service after December 31, 2021, 6 percent,
‘‘(B) in the case of any property the construction of
which begins after December 31, 2032, and before January
1, 2034, 5.2 percent, and
‘‘(C) in the case of any property the construction of
which begins after December 31, 2033, and before January
1, 2035, 4.4 percent.’’.
(e) 6 PERCENT CREDIT FOR GEOTHERMAL.—Section
48(a)(2)(A)(i)(II) is amended by striking ‘‘paragraph (3)(A)(i)’’ and
inserting ‘‘clause (i) or (iii) of paragraph (3)(A)’’.
(f) ENERGY STORAGE TECHNOLOGIES; QUALIFIED BIOGAS PROP-
ERTY; MICROGRID CONTROLLERS; EXTENSION OF OTHER PROPERTY.—
(1) IN GENERAL.—Section 48(a)(3)(A) is amended by striking
‘‘or’’ at the end of clause (vii), and by adding at the end the
following new clauses:
‘‘(ix) energy storage technology,
‘‘(x) qualified biogas property, or
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‘‘(xi) microgrid controllers,’’.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1915
(2) APPLICATION OF 6 PERCENT CREDIT.—Section
48(a)(2)(A)(i) is amended by striking ‘‘and’’ at the end of sub- 26 USC 48.
clauses (IV) and (V) and adding at the end the following new
subclauses:
‘‘(VI) energy storage technology,
‘‘(VII) qualified biogas property,
‘‘(VIII) microgrid controllers, and
‘‘(IX) energy property described in clauses (v)
and (vii) of paragraph (3)(A), and’’.
(3) DEFINITIONS.—Section 48(c) is amended by adding at
the end the following new paragraphs:
‘‘(6) ENERGY STORAGE TECHNOLOGY.—
‘‘(A) IN GENERAL.—The term ‘energy storage technology’
means—
‘‘(i) property (other than property primarily used
in the transportation of goods or individuals and not
for the production of electricity) which receives, stores,
and delivers energy for conversion to electricity (or,
in the case of hydrogen, which stores energy), and
has a nameplate capacity of not less than 5 kilowatt
hours, and
‘‘(ii) thermal energy storage property.
‘‘(B) MODIFICATIONS OF CERTAIN PROPERTY.—In the
case of any property which either—
‘‘(i) was placed in service before the date of enact-
ment of this section and would be described in subpara-
graph (A)(i), except that such property has a capacity
of less than 5 kilowatt hours and is modified in a
manner that such property (after such modification)
has a nameplate capacity of not less than 5 kilowatt
hours, or
‘‘(ii) is described in subparagraph (A)(i) and is
modified in a manner that such property (after such
modification) has an increase in nameplate capacity
of not less than 5 kilowatt hours,
such property shall be treated as described in subparagraph
(A)(i) except that the basis of any existing property prior
to such modification shall not be taken into account for
purposes of this section. In the case of any property to Applicability.
which this subparagraph applies, subparagraph (D) shall
be applied by substituting ‘modification’ for ‘construction’.
‘‘(C) THERMAL ENERGY STORAGE PROPERTY.—
‘‘(i) IN GENERAL.—Subject to clause (ii), for pur-
poses of this paragraph, the term ‘thermal energy stor-
age property’ means property comprising a system
which—
‘‘(I) is directly connected to a heating, ventila-
tion, or air conditioning system,
‘‘(II) removes heat from, or adds heat to, a
storage medium for subsequent use, and
‘‘(III) provides energy for the heating or cooling
of the interior of a residential or commercial
building.
‘‘(ii) EXCLUSION.—The term ‘thermal energy stor-
age property’ shall not include—
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‘‘(I) a swimming pool,
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136 STAT. 1916 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(II) combined heat and power system prop-
erty, or
‘‘(III) a building or its structural components.
‘‘(D) TERMINATION.—The term ‘energy storage tech-
nology’ shall not include any property the construction
of which begins after December 31, 2024.
‘‘(7) QUALIFIED BIOGAS PROPERTY.—
‘‘(A) IN GENERAL.—The term ‘qualified biogas property’
means property comprising a system which—
‘‘(i) converts biomass (as defined in section
45K(c)(3), as in effect on the date of enactment of
this paragraph) into a gas which—
‘‘(I) consists of not less than 52 percent
methane by volume, or
‘‘(II) is concentrated by such system into a
gas which consists of not less than 52 percent
methane, and
‘‘(ii) captures such gas for sale or productive use,
and not for disposal via combustion.
‘‘(B) INCLUSION OF CLEANING AND CONDITIONING PROP-
ERTY.—The term ‘qualified biogas property’ includes any
property which is part of such system which cleans or
conditions such gas.
‘‘(C) TERMINATION.—The term ‘qualified biogas prop-
erty’ shall not include any property the construction of
which begins after December 31, 2024.
‘‘(8) MICROGRID CONTROLLER.—
‘‘(A) IN GENERAL.—The term ‘microgrid controller’
means equipment which is—
‘‘(i) part of a qualified microgrid, and
‘‘(ii) designed and used to monitor and control the
energy resources and loads on such microgrid.
‘‘(B) QUALIFIED MICROGRID.—The term ‘qualified
microgrid’ means an electrical system which—
‘‘(i) includes equipment which is capable of gener-
ating not less than 4 kilowatts and not greater than
20 megawatts of electricity,
‘‘(ii) is capable of operating—
‘‘(I) in connection with the electrical grid and
as a single controllable entity with respect to such
grid, and
‘‘(II) independently (and disconnected) from
such grid, and
‘‘(iii) is not part of a bulk-power system (as defined
in section 215 of the Federal Power Act (16 U.S.C.
824o)).
‘‘(C) TERMINATION.—The term ‘microgrid controller’
shall not include any property the construction of which
begins after December 31, 2024.’’.
(4) DENIAL OF DOUBLE BENEFIT FOR QUALIFIED BIOGAS PROP-
26 USC 45. ERTY.—Section 45(e) is amended by adding at the end the
following new paragraph:
‘‘(12) COORDINATION WITH ENERGY CREDIT FOR QUALIFIED
BIOGAS PROPERTY.—The term ‘qualified facility’ shall not include
any facility which produces electricity from gas produced by
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qualified biogas property (as defined in section 48(c)(7)) if a
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1917
credit is allowed under section 48 with respect to such property
for the taxable year or any prior taxable year.’’.
(5) PUBLIC UTILITY PROPERTY.—Paragraph (2) of section
50(d) is amended— 26 USC 50.
(A) by adding after the first sentence the following
new sentence: ‘‘At the election of a taxpayer, this paragraph
shall not apply to any energy storage technology (as defined
in section 48(c)(6)), provided—’’, and
(B) by adding the following new subparagraphs:
‘‘(A) no election under this paragraph shall be per-
mitted if the making of such election is prohibited by
a State or political subdivision thereof, by any agency or
instrumentality of the United States, or by a public service
or public utility commission or other similar body of any
State or political subdivision that regulates public utilities
as described in section 7701(a)(33)(A),
‘‘(B) an election under this paragraph shall be made
separately with respect to each energy storage technology
by the due date (including extensions) of the Federal tax
return for the taxable year in which the energy storage
technology is placed in service by the taxpayer, and once
made, may be revoked only with the consent of the Sec-
retary, and
‘‘(C) an election shall not apply with respect to any
energy storage technology if such energy storage technology
has a maximum capacity equal to or less than 500 kilowatt
hours.’’.
(g) FUEL CELLS USING ELECTROMECHANICAL PROCESSES.—
(1) IN GENERAL.—Section 48(c)(1) is amended—
(A) in subparagraph (A)(i)—
(i) by inserting ‘‘or electromechanical’’ after
‘‘electrochemical’’, and
(ii) by inserting ‘‘(1 kilowatt in the case of a fuel
cell power plant with a linear generator assembly)’’
after ‘‘0.5 kilowatt’’, and
(B) in subparagraph (C)—
(i) by inserting ‘‘, or linear generator assembly,’’
after ‘‘a fuel cell stack assembly’’, and
(ii) by inserting ‘‘or electromechanical’’ after
‘‘electrochemical’’.
(2) LINEAR GENERATOR ASSEMBLY LIMITATION.—Section
48(c)(1) is amended by redesignating subparagraph (D) as
subparagraph (E) and by inserting after subparagraph (C) the
following new subparagraph:
‘‘(D) LINEAR GENERATOR ASSEMBLY.—The term ‘linear
generator assembly’ does not include any assembly which
contains rotating parts.’’.
(h) DYNAMIC GLASS.—Section 48(a)(3)(A)(ii) is amended by
inserting ‘‘, or electrochromic glass which uses electricity to change
its light transmittance properties in order to heat or cool a struc-
ture,’’ after ‘‘sunlight’’.
(i) COORDINATION WITH LOW INCOME HOUSING TAX CREDIT.—
Paragraph (3) of section 50(c) is amended—
(1) by striking ‘‘and’’ at the end of subparagraph (A),
(2) by striking the period at the end of subparagraph (B)
and inserting ‘‘, and’’, and
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(3) by adding at the end the following new subparagraph:
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136 STAT. 1918 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(C) paragraph (1) shall not apply for purposes of deter-
mining eligible basis under section 42.’’.
(j) INTERCONNECTION PROPERTY.—Section 48(a), as amended
26 USC 48. by the preceding provisions of this Act, is amended by adding
at the end the following new paragraph:
Definitions. ‘‘(8) INTERCONNECTION PROPERTY.—
Determination. ‘‘(A) IN GENERAL.—For purposes of determining the
credit under subsection (a), energy property shall include
amounts paid or incurred by the taxpayer for qualified
interconnection property in connection with the installation
of energy property (as defined in paragraph (3)) which
has a maximum net output of not greater than 5 megawatts
(as measured in alternating current), to provide for the
transmission or distribution of the electricity produced or
stored by such property, and which are properly chargeable
to the capital account of the taxpayer.
‘‘(B) QUALIFIED INTERCONNECTION PROPERTY.—The
term ‘qualified interconnection property’ means, with
respect to an energy project which is not a microgrid con-
troller, any tangible property—
‘‘(i) which is part of an addition, modification, or
upgrade to a transmission or distribution system which
is required at or beyond the point at which the energy
project interconnects to such transmission or distribu-
tion system in order to accommodate such interconnec-
tion,
‘‘(ii) either—
‘‘(I) which is constructed, reconstructed, or
erected by the taxpayer, or
‘‘(II) for which the cost with respect to the
construction, reconstruction, or erection of such
property is paid or incurred by such taxpayer,
and
‘‘(iii) the original use of which, pursuant to an
interconnection agreement, commences with a utility.
‘‘(C) INTERCONNECTION AGREEMENT.—The term ‘inter-
connection agreement’ means an agreement with a utility
for the purposes of interconnecting the energy property
owned by such taxpayer to the transmission or distribution
system of such utility.
‘‘(D) UTILITY.—For purposes of this paragraph, the
term ‘utility’ means the owner or operator of an electrical
transmission or distribution system which is subject to
the regulatory authority of a State or political subdivision
thereof, any agency or instrumentality of the United States,
a public service or public utility commission or other similar
body of any State or political subdivision thereof, or the
governing or ratemaking body of an electric cooperative.
‘‘(E) SPECIAL RULE FOR INTERCONNECTION PROPERTY.—
In the case of expenses paid or incurred for interconnection
property, amounts otherwise chargeable to capital account
with respect to such expenses shall be reduced under rules
similar to the rules of section 50(c).’’.
(k) ENERGY PROJECTS, WAGE REQUIREMENTS, AND APPRENTICE-
SHIP REQUIREMENTS.—Section 48(a), as amended by the preceding
provisions of this Act, is amended by adding at the end the following
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new paragraphs:
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1919
‘‘(9) INCREASED CREDIT AMOUNT FOR ENERGY PROJECTS.—
‘‘(A) IN GENERAL.—
‘‘(i) RULE.—In the case of any energy project which
satisfies the requirements of subparagraph (B), the
amount of the credit determined under this subsection
(determined after the application of paragraphs (1)
through (8) and without regard to this clause) shall
be equal to such amount multiplied by 5.
‘‘(ii) ENERGY PROJECT DEFINED.—For purposes of
this subsection, the term ‘energy project’ means a
project consisting of one or more energy properties
that are part of a single project.
‘‘(B) PROJECT REQUIREMENTS.—A project meets the
requirements of this subparagraph if it is one of the fol-
lowing:
‘‘(i) A project with a maximum net output of less
than 1 megawatt of electrical (as measured in alter-
nating current) or thermal energy.
‘‘(ii) A project the construction of which begins Time period.
before the date that is 60 days after the Secretary Publication.
publishes guidance with respect to the requirements Guidelines.
of paragraphs (10)(A) and (11).
‘‘(iii) A project which satisfies the requirements
of paragraphs (10)(A) and (11).
‘‘(10) PREVAILING WAGE REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements described in this
subparagraph with respect to any energy project are that
the taxpayer shall ensure that any laborers and mechanics
employed by the taxpayer or any contractor or subcon-
tractor in—
‘‘(i) the construction of such energy project, and
‘‘(ii) for the 5-year period beginning on the date Time period.
such project is originally placed in service, the alter-
ation or repair of such project,
shall be paid wages at rates not less than the prevailing
rates for construction, alteration, or repair of a similar
character in the locality in which such project is located
as most recently determined by the Secretary of Labor,
in accordance with subchapter IV of chapter 31 of title
40, United States Code. Subject to subparagraph (C), for
purposes of any determination under paragraph (9)(A)(i)
for the taxable year in which the energy project is placed
in service, the taxpayer shall be deemed to satisfy the
requirement under clause (ii) at the time such project is
placed in service.
‘‘(B) CORRECTION AND PENALTY RELATED TO FAILURE Applicability.
TO SATISFY WAGE REQUIREMENTS.—Rules similar to the
rules of section 45(b)(7)(B) shall apply.
‘‘(C) RECAPTURE.—The Secretary shall, by regulations Regulations.
or other guidance, provide for recapturing the benefit of Guidelines.
any increase in the credit allowed under this subsection
by reason of this paragraph with respect to any project
which does not satisfy the requirements under subpara-
graph (A) (after application of subparagraph (B)) for the
period described in clause (ii) of subparagraph (A) (but
which does not cease to be investment credit property
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within the meaning of section 50(a)). The period and Determination.
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136 STAT. 1920 PUBLIC LAW 117–169—AUG. 16, 2022
percentage of such recapture shall be determined under
rules similar to the rules of section 50(a).
‘‘(11) APPRENTICESHIP REQUIREMENTS.—Rules similar to the
rules of section 45(b)(8) shall apply.’’.
(l) DOMESTIC CONTENT; PHASEOUT FOR ELECTIVE PAYMENT.—
26 USC 48. Section 48(a), as amended by the preceding provisions of this Act,
is amended by adding at the end the following new paragraphs:
‘‘(12) DOMESTIC CONTENT BONUS CREDIT AMOUNT.—
‘‘(A) IN GENERAL.—In the case of any energy project
which satisfies the requirement under subparagraph (B),
for purposes of applying paragraph (2) with respect to
such property, the energy percentage shall be increased
by the applicable credit rate increase.
Applicability. ‘‘(B) REQUIREMENT.—Rules similar to the rules of sec-
tion 45(b)(9)(B) shall apply.
‘‘(C) APPLICABLE CREDIT RATE INCREASE.—For purposes
of subparagraph (A), the applicable credit rate increase
shall be—
‘‘(i) in the case of an energy project which does
not satisfy the requirements of paragraph (9)(B), 2
percentage points, and
‘‘(ii) in the case of an energy project which satisfies
the requirements of paragraph (9)(B), 10 percentage
points.
Applicability. ‘‘(13) PHASEOUT FOR ELECTIVE PAYMENT.—In the case of
a taxpayer making an election under section 6417 with respect
to a credit under this section, rules similar to the rules of
section 45(b)(10) shall apply.’’.
(m) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT
BONDS.—Section 48(a)(4) is amended to read as follows:
‘‘(4) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT
Applicability. BONDS.—Rules similar to the rule under section 45(b)(3) shall
apply for purposes of this section.’’.
(n) TREATMENT OF CERTAIN CONTRACTS INVOLVING ENERGY
STORAGE.—Section 7701(e) is amended—
(1) in paragraph (3)—
(A) in subparagraph (A)(i), by striking ‘‘or’’ at the end
of subclause (II), by striking ‘‘and’’ at the end of subclause
(III) and inserting ‘‘or’’, and by adding at the end the
following new subclause:
‘‘(IV) the operation of a storage facility, and’’,
and
(B) by adding at the end the following new subpara-
graph:
Definition. ‘‘(F) STORAGE FACILITY.—For purposes of subparagraph
(A), the term ‘storage facility’ means a facility which uses
energy storage technology within the meaning of section
48(c)(6).’’, and
(2) in paragraph (4), by striking ‘‘or water treatment works
facility’’ and inserting ‘‘water treatment works facility, or stor-
age facility’’.
(o) INCREASE IN CREDIT RATE FOR ENERGY COMMUNITIES.—
Section 48(a), as amended by the preceding provisions of this Act,
is amended by adding at the end the following new paragraph:
‘‘(14) INCREASE IN CREDIT RATE FOR ENERGY COMMU-
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NITIES.—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1921
‘‘(A) IN GENERAL.—In the case of any energy project
that is placed in service within an energy community (as
defined in section 45(b)(11)(B), as applied by substituting
‘energy project’ for ‘qualified facility’ each place it appears),
for purposes of applying paragraph (2) with respect to
energy property which is part of such project, the energy
percentage shall be increased by the applicable credit rate
increase.
‘‘(B) APPLICABLE CREDIT RATE INCREASE.—For purposes
of subparagraph (A), the applicable credit rate increase
shall be equal to—
‘‘(i) in the case of any energy project which does
not satisfy the requirements of paragraph (9)(B), 2
percentage points, and
‘‘(ii) in the case of any energy project which satis-
fies the requirements of paragraph (9)(B), 10 percent-
age points.’’.
(p) REGULATIONS.—Section 48(a), as amended by the preceding
provisions of this Act, is amended by adding at the end the following 26 USC 48.
new paragraph:
‘‘(15) REGULATIONS AND GUIDANCE.—The Secretary shall Determination.
issue such regulations or other guidance as the Secretary deter- Requirements.
mines necessary to carry out the purposes of this subsection, Records.
including regulations or other guidance which provides for
requirements for recordkeeping or information reporting for
purposes of administering the requirements of this subsection.’’.
(q) EFFECTIVE DATES.— Applicability.
(1) IN GENERAL.—Except as provided in paragraphs (2) 26 USC 45 note.
and (3), the amendments made by this section shall apply
to property placed in service after December 31, 2021.
(2) OTHER PROPERTY.—The amendments made by sub-
sections (f), (g), (h), (i), (j), (l), (n), and (o) shall apply to
property placed in service after December 31, 2022.
(3) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT
BONDS.—The amendments made by subsection (m) shall apply
to property the construction of which begins after the date
of enactment of this Act.
SEC. 13103. INCREASE IN ENERGY CREDIT FOR SOLAR AND WIND
FACILITIES PLACED IN SERVICE IN CONNECTION WITH
LOW-INCOME COMMUNITIES.
(a) IN GENERAL.—Section 48 is amended by adding at the
end the following new subsection:
‘‘(e) SPECIAL RULES FOR CERTAIN SOLAR AND WIND FACILITIES
PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMU-
NITIES.—
‘‘(1) IN GENERAL.—In the case of any qualified solar and
wind facility with respect to which the Secretary makes an
allocation of environmental justice solar and wind capacity
limitation under paragraph (4)—
‘‘(A) the energy percentage otherwise determined under
paragraph (2) or (5) of subsection (a) with respect to any
eligible property which is part of such facility shall be
increased by—
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136 STAT. 1922 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(i) in the case of a facility described in subclause
(I) of paragraph (2)(A)(iii) and not described in sub-
clause (II) of such paragraph, 10 percentage points,
and
‘‘(ii) in the case of a facility described in subclause
(II) of paragraph (2)(A)(iii), 20 percentage points, and
‘‘(B) the increase in the credit determined under sub-
section (a) by reason of this subsection for any taxable
year with respect to all property which is part of such
facility shall not exceed the amount which bears the same
ratio to the amount of such increase (determined without
regard to this subparagraph) as—
‘‘(i) the environmental justice solar and wind
capacity limitation allocated to such facility, bears to
‘‘(ii) the total megawatt nameplate capacity of such
facility, as measured in direct current.
‘‘(2) QUALIFIED SOLAR AND WIND FACILITY.—For purposes
of this subsection—
Definition. ‘‘(A) IN GENERAL.—The term ‘qualified solar and wind
facility’ means any facility—
‘‘(i) which generates electricity solely from property
described in section 45(d)(1) or in clause (i) or (vi)
of subsection (a)(3)(A),
‘‘(ii) which has a maximum net output of less than
5 megawatts (as measured in alternating current), and
‘‘(iii) which—
‘‘(I) is located in a low-income community (as
defined in section 45D(e)) or on Indian land (as
defined in section 2601(2) of the Energy Policy
Act of 1992 (25 U.S.C. 3501(2))), or
‘‘(II) is part of a qualified low-income residen-
tial building project or a qualified low-income eco-
nomic benefit project.
‘‘(B) QUALIFIED LOW-INCOME RESIDENTIAL BUILDING
PROJECT.—A facility shall be treated as part of a qualified
low-income residential building project if—
‘‘(i) such facility is installed on a residential rental
building which participates in a covered housing pro-
gram (as defined in section 41411(a) of the Violence
Against Women Act of 1994 (34 U.S.C. 12491(a)(3)),
a housing assistance program administered by the
Department of Agriculture under title V of the Housing
Act of 1949, a housing program administered by a
tribally designated housing entity (as defined in section
4(22) of the Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C. 4103(22)))
or such other affordable housing programs as the Sec-
retary may provide, and
‘‘(ii) the financial benefits of the electricity pro-
duced by such facility are allocated equitably among
the occupants of the dwelling units of such building.
‘‘(C) QUALIFIED LOW-INCOME ECONOMIC BENEFIT
PROJECT.—A facility shall be treated as part of a qualified
low-income economic benefit project if at least 50 percent
of the financial benefits of the electricity produced by such
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facility are provided to households with income of—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1923
‘‘(i) less than 200 percent of the poverty line (as
defined in section 36B(d)(3)(A)) applicable to a family
of the size involved, or
‘‘(ii) less than 80 percent of area median gross
income (as determined under section 142(d)(2)(B)).
‘‘(D) FINANCIAL BENEFIT.—For purposes of subpara-
graphs (B) and (C), electricity acquired at a below-market
rate shall not fail to be taken into account as a financial
benefit.
‘‘(3) ELIGIBLE PROPERTY.—For purposes of this section, the Definition.
term ‘eligible property’ means energy property which—
‘‘(A) is part of a facility described in section 45(d)(1)
for which an election was made under subsection (a)(5),
or
‘‘(B) is described in clause (i) or (vi) of subsection
(a)(3)(A),
including energy storage technology (as described in subsection
(a)(3)(A)(ix)) installed in connection with such energy property.
‘‘(4) ALLOCATIONS.—
‘‘(A) IN GENERAL.—Not later than 180 days after the Deadline.
date of enactment of this subsection, the Secretary shall
establish a program to allocate amounts of environmental
justice solar and wind capacity limitation to qualified solar
and wind facilities. In establishing such program and to Procedures.
carry out the purposes of this subsection, the Secretary
shall provide procedures to allow for an efficient allocation
process, including, when determined appropriate, consider-
ation of multiple projects in a single application if such
projects will be placed in service by a single taxpayer.
‘‘(B) LIMITATION.—The amount of environmental justice
solar and wind capacity limitation allocated by the Sec-
retary under subparagraph (A) during any calendar year
shall not exceed the annual capacity limitation with respect
to such year.
‘‘(C) ANNUAL CAPACITY LIMITATION.—For purposes of Definition.
this paragraph, the term ‘annual capacity limitation’ means
1.8 gigawatts of direct current capacity for each of calendar
years 2023 and 2024, and zero thereafter.
‘‘(D) CARRYOVER OF UNUSED LIMITATION.—If the annual
capacity limitation for any calendar year exceeds the aggre-
gate amount allocated for such year under this paragraph,
such limitation for the succeeding calendar year shall be
increased by the amount of such excess. No amount may
be carried under the preceding sentence to any calendar
year after 2024 except as provided in section
48E(h)(4)(D)(ii).
‘‘(E) PLACED IN SERVICE DEADLINE.—
‘‘(i) IN GENERAL.—Paragraph (1) shall not apply Time period.
with respect to any property which is placed in service
after the date that is 4 years after the date of the
allocation with respect to the facility of which such
property is a part.
‘‘(ii) APPLICATION OF CARRYOVER.—Any amount of
environmental justice solar and wind capacity limita-
tion which expires under clause (i) during any calendar
year shall be taken into account as an excess described
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in subparagraph (D) (or as an increase in such excess)
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136 STAT. 1924 PUBLIC LAW 117–169—AUG. 16, 2022
for such calendar year, subject to the limitation
imposed by the last sentence of such subparagraph.
Regulations. ‘‘(5) RECAPTURE.—The Secretary shall, by regulations or
Guidelines. other guidance, provide for recapturing the benefit of any
increase in the credit allowed under subsection (a) by reason
of this subsection with respect to any property which ceases
to be property eligible for such increase (but which does not
cease to be investment credit property within the meaning
Determination. of section 50(a)). The period and percentage of such recapture
Time period. shall be determined under rules similar to the rules of section
50(a). To the extent provided by the Secretary, such recapture
may not apply with respect to any property if, within 12 months
after the date the taxpayer becomes aware (or reasonably
should have become aware) of such property ceasing to be
property eligible for such increase, the eligibility of such prop-
erty for such increase is restored. The preceding sentence shall
not apply more than once with respect to any facility.’’.
26 USC 48 note. (b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 2023.
SEC. 13104. EXTENSION AND MODIFICATION OF CREDIT FOR CARBON
OXIDE SEQUESTRATION.
(a) MODIFICATION OF CARBON OXIDE CAPTURE REQUIRE-
MENTS.—
26 USC 45Q. (1) IN GENERAL.—Section 45Q(d) is amended to read as
follows:
Definition. ‘‘(d) QUALIFIED FACILITY.—For purposes of this section, the
term ‘qualified facility’ means any industrial facility or direct air
capture facility—
Effective date. ‘‘(1) the construction of which begins before January 1,
2033, and either—
‘‘(A) construction of carbon capture equipment begins
before such date, or
‘‘(B) the original planning and design for such facility
includes installation of carbon capture equipment, and
‘‘(2) which—
‘‘(A) in the case of a direct air capture facility, captures
not less than 1,000 metric tons of qualified carbon oxide
during the taxable year,
‘‘(B) in the case of an electricity generating facility—
‘‘(i) captures not less than 18,750 metric tons of
qualified carbon oxide during the taxable year, and
‘‘(ii) with respect to any carbon capture equipment
for the applicable electric generating unit at such
facility, has a capture design capacity of not less than
75 percent of the baseline carbon oxide production
of such unit, or
‘‘(C) in the case of any other facility, captures not
less than 12,500 metric tons of qualified carbon oxide
during the taxable year.’’.
(2) DEFINITIONS.—
(A) IN GENERAL.—Section 45Q(e) is amended—
(i) by redesignating paragraphs (1) through (3)
as paragraphs (3) through (5), respectively, and
(ii) by inserting after ‘‘For purposes of this sec-
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tion—’’ the following new paragraphs:
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1925
‘‘(1) APPLICABLE ELECTRIC GENERATING UNIT.—The term
‘applicable electric generating unit’ means the principal electric
generating unit for which the carbon capture equipment is
originally planned and designed.
‘‘(2) BASELINE CARBON OXIDE PRODUCTION.—
‘‘(A) IN GENERAL.—The term ‘baseline carbon oxide Time periods.
production’ means either of the following:
‘‘(i) In the case of an applicable electric generating
unit which was originally placed in service more than
1 year prior to the date on which construction of the
carbon capture equipment begins, the average annual
carbon oxide production, by mass, from such unit
during—
‘‘(I) in the case of an applicable electric gener-
ating unit which was originally placed in service
more than 1 year prior to the date on which
construction of the carbon capture equipment
begins and on or after the date which is 3 years
prior to the date on which construction of such
equipment begins, the period beginning on the date
such unit was placed in service and ending on
the date on which construction of such equipment
began, and
‘‘(II) in the case of an applicable electric gener-
ating unit which was originally placed in service
more than 3 years prior to the date on which
construction of the carbon capture equipment
begins, the 3 years with the highest annual carbon
oxide production during the 12-year period pre-
ceding the date on which construction of such
equipment began.
‘‘(ii) In the case of an applicable electric generating
unit which—
‘‘(I) as of the date on which construction of
the carbon capture equipment begins, is not yet
placed in service, or
‘‘(II) was placed in service during the 1-year
period prior to the date on which construction of
the carbon capture equipment begins,
the designed annual carbon oxide production, by mass,
as determined based on an assumed capacity factor
of 60 percent.
‘‘(B) CAPACITY FACTOR.—The term ‘capacity factor’
means the ratio (expressed as a percentage) of the actual
electric output from the applicable electric generating unit
to the potential electric output from such unit.’’.
(B) CONFORMING AMENDMENT.—Section 142(o)(1)(B) is 26 USC 142.
amended by striking ‘‘section 45Q(e)(1)’’ and inserting ‘‘sec-
tion 45Q(e)(3)’’.
(b) MODIFIED APPLICABLE DOLLAR AMOUNT.—Section
45Q(b)(1)(A) is amended—
(1) in clause (i)—
(A) in subclause (I), by striking ‘‘the dollar amount’’
and all that follows through ‘‘such period’’ and inserting
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‘‘$17’’, and
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136 STAT. 1926 PUBLIC LAW 117–169—AUG. 16, 2022
(B) in subclause (II), by striking ‘‘the dollar amount’’
and all that follows through ‘‘such period’’ and inserting
‘‘$12’’, and
(2) in clause (ii)—
(A) in subclause (I), by striking ‘‘$50’’ and inserting
‘‘$17’’, and
(B) in subclause (II), by striking ‘‘$35’’ and inserting
‘‘$12’’.
(c) DETERMINATION OF APPLICABLE DOLLAR AMOUNT.—
Effective dates. (1) IN GENERAL.—Section 45Q(b)(1), as amended by the
26 USC 45Q. preceding provisions of this Act, is amended—
(A) by redesignating subparagraph (B) as subpara-
graph (D), and
(B) by inserting after subparagraph (A) the following
new subparagraphs:
‘‘(B) SPECIAL RULE FOR DIRECT AIR CAPTURE FACILI-
TIES.—In the case of any qualified facility described in
subsection (d)(2)(A) which is placed in service after
December 31, 2022, the applicable dollar amount shall
be an amount equal to the applicable dollar amount other-
wise determined with respect to such qualified facility
under subparagraph (A), except that such subparagraph
shall be applied—
‘‘(i) by substituting ‘$36’ for ‘$17’ each place it
appears, and
‘‘(ii) by substituting ‘$26’ for ‘$12’ each place it
appears.
‘‘(C) APPLICABLE DOLLAR AMOUNT FOR ADDITIONAL
CARBON CAPTURE EQUIPMENT.—In the case of any qualified
facility which is placed in service before January 1, 2023,
if any additional carbon capture equipment is installed
at such facility and such equipment is placed in service
after December 31, 2022, the applicable dollar amount
shall be an amount equal to the applicable dollar amount
otherwise determined under this paragraph, except that
subparagraph (B) shall be applied—
‘‘(i) by substituting ‘before January 1, 2023’ for
‘after December 31, 2022’, and
‘‘(ii) by substituting ‘the additional carbon capture
equipment installed at such qualified facility’ for ‘such
qualified facility’.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 45Q(b)(1)(A) is amended by striking ‘‘The
applicable dollar amount’’ and inserting ‘‘Except as pro-
vided in subparagraph (B) or (C), the applicable dollar
amount’’.
(B) Section 45Q(b)(1)(D), as redesignated by paragraph
(1)(A), is amended by striking ‘‘subparagraph (A)’’ and
inserting ‘‘subparagraph (A), (B), or (C)’’.
(d) WAGE AND APPRENTICESHIP REQUIREMENTS.—Section 45Q
is amended by redesignating subsection (h) as subsection (i) and
inserting after subsection (g) following new subsection:
‘‘(h) INCREASED CREDIT AMOUNT FOR QUALIFIED FACILITIES AND
CARBON CAPTURE EQUIPMENT.—
‘‘(1) IN GENERAL.—In the case of any qualified facility or
any carbon capture equipment which satisfy the requirements
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of paragraph (2), the amount of the credit determined under
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1927
subsection (a) shall be equal to such amount (determined with-
out regard to this sentence) multiplied by 5.
‘‘(2) REQUIREMENTS.—The requirements described in this Time periods.
paragraph are that— Publication.
Guidelines.
‘‘(A) with respect to any qualified facility the construc-
tion of which begins on or after the date that is 60 days
after the Secretary publishes guidance with respect to the
requirements of paragraphs (3)(A) and (4), as well as any
carbon capture equipment placed in service at such
facility—
‘‘(i) subject to subparagraph (B) of paragraph (3),
the taxpayer satisfies the requirements under subpara-
graph (A) of such paragraph with respect to such
facility and equipment, and
‘‘(ii) the taxpayer satisfies the requirements under
paragraph (4) with respect to the construction of such
facility and equipment,
‘‘(B) with respect to any carbon capture equipment
the construction of which begins on or after the date that
is 60 days after the Secretary publishes guidance with
respect to the requirements of paragraphs (3)(A) and (4),
and which is installed at a qualified facility the construction
of which began prior to such date—
‘‘(i) subject to subparagraph (B) of paragraph (3),
the taxpayer satisfies the requirements under subpara-
graph (A) of such paragraph with respect to such equip-
ment, and
‘‘(ii) the taxpayer satisfies the requirements under
paragraph (4) with respect to the construction of such
equipment, or
‘‘(C) the construction of carbon capture equipment
begins prior to the date that is 60 days after the Secretary
publishes guidance with respect to the requirements of
paragraphs (3)(A) and (4), and such equipment is installed
at a qualified facility the construction of which begins
prior to such date.
‘‘(3) PREVAILING WAGE REQUIREMENTS.— Applicability.
‘‘(A) IN GENERAL.—The requirements described in this
subparagraph with respect to any qualified facility and
any carbon capture equipment placed in service at such
facility are that the taxpayer shall ensure that any laborers
and mechanics employed by the taxpayer or any contractor
or subcontractor in—
‘‘(i) the construction of such facility or equipment,
and
‘‘(ii) with respect to any taxable year, for any por-
tion of such taxable year which is within the period
described in paragraph (3)(A) or (4)(A) of subsection
(a), the alteration or repair of such facility or such
equipment,
shall be paid wages at rates not less than the prevailing
rates for construction, alteration, or repair of a similar
character in the locality in which such facility and equip-
ment are located as most recently determined by the Sec-
retary of Labor, in accordance with subchapter IV of
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chapter 31 of title 40, United States Code. For purposes
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136 STAT. 1928 PUBLIC LAW 117–169—AUG. 16, 2022
of determining an increased credit amount under para-
graph (1) for a taxable year, the requirement under clause
(ii) of this subparagraph is applied to such taxable year
in which the alteration or repair of qualified facility occurs.
‘‘(B) CORRECTION AND PENALTY RELATED TO FAILURE
TO SATISFY WAGE REQUIREMENTS.—Rules similar to the
rules of section 45(b)(7)(B) shall apply.
Applicability. ‘‘(4) APPRENTICESHIP REQUIREMENTS.—Rules similar to the
rules of section 45(b)(8) shall apply.
Determination. ‘‘(5) REGULATIONS AND GUIDANCE.—The Secretary shall
Requirements. issue such regulations or other guidance as the Secretary deter-
Records. mines necessary to carry out the purposes of this subsection,
including regulations or other guidance which provides for
requirements for recordkeeping or information reporting for
purposes of administering the requirements of this subsection.’’.
26 USC 45Q. (e) CREDIT REDUCED FOR TAX-EXEMPT BONDS.—Section 45Q(f)
is amended—
(1) by striking the second paragraph (3), as added at the
end of such section by section 80402(e) of the Infrastructure
Investment and Jobs Act (Public Law 117-58), and
(2) by adding at the end the following new paragraph:
Applicability. ‘‘(8) CREDIT REDUCED FOR TAX-EXEMPT BONDS.—Rules
similar to the rule under section 45(b)(3) shall apply for pur-
poses of this section.’’.
(f) APPLICATION OF SECTION FOR CERTAIN CARBON CAPTURE
EQUIPMENT.—Section 45Q(g) is amended by inserting ‘‘the earlier
of January 1, 2023, and’’ before ‘‘the end of the calendar year’’.
(g) ELECTION.—Section 45Q(f), as amended by subsection (e),
is amended by adding at the end the following new paragraph:
Time period. ‘‘(9) ELECTION.—For purposes of paragraphs (3) and (4)
of subsection (a), a person described in paragraph (3)(A)(ii)
may elect, at such time and in such manner as the Secretary
may prescribe, to have the 12–year period begin on the first
day of the first taxable year in which a credit under this
section is claimed with respect to carbon capture equipment
which is originally placed in service at a qualified facility on
or after the date of the enactment of the Bipartisan Budget
Act of 2018 (after application of paragraph (6), where
applicable) if—
‘‘(A) no taxpayer claimed a credit under this section
with respect to such carbon capture equipment for any
prior taxable year,
‘‘(B) the qualified facility at which such carbon capture
equipment is placed in service is located in an area affected
by a federally-declared disaster (as defined by section
165(i)(5)(A)) after the carbon capture equipment is origi-
nally placed in service, and
‘‘(C) such federally-declared disaster results in a ces-
sation of the operation of the qualified facility or the carbon
capture equipment after such equipment is originally
placed in service.’’.
(h) REGULATIONS FOR BASELINE CARBON OXIDE PRODUCTION.—
Subsection (i) of section 45Q, as redesignated by subsection (d),
is amended—
(1) in paragraph (1), by striking ‘‘and’’,
(2) in paragraph (2), by striking the period at the end
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and inserting ‘‘, and’’, and
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1929
(3) by adding at the end the following new paragraph:
‘‘(3) for purposes of subsection (d)(2)(B)(ii), adjust the base-
line carbon oxide production with respect to any applicable
electric generating unit at any electricity generating facility
if, after the date on which the carbon capture equipment is
placed in service, modifications which are chargeable to capital
account are made to such unit which result in a significant
increase or decrease in carbon oxide production.’’.
(i) EFFECTIVE DATES.— Applicability.
(1) IN GENERAL.—Except as provided in paragraphs (2), 26 USC 45Q
(3), and (4), the amendments made by this section shall apply note.
to facilities or equipment placed in service after December
31, 2022.
(2) MODIFICATION OF CARBON OXIDE CAPTURE REQUIRE-
MENTS.—The amendments made by subsection (a) shall apply
to facilities or equipment the construction of which begins after
the date of enactment of this Act.
(3) APPLICATION OF SECTION FOR CERTAIN CARBON CAPTURE
EQUIPMENT.—The amendments made by subsection (f) shall
take effect on the date of enactment of this Act.
(4) ELECTION.—The amendments made by subsection (g)
shall apply to carbon oxide captured and disposed of after
December 31, 2021.
SEC. 13105. ZERO-EMISSION NUCLEAR POWER PRODUCTION CREDIT.
(a) IN GENERAL.—Subpart D of part IV of subchapter A of
chapter 1 is amended by adding at the end the following new
section:
‘‘SEC. 45U. ZERO-EMISSION NUCLEAR POWER PRODUCTION CREDIT. 26 USC 45U.
‘‘(a) AMOUNT OF CREDIT.—For purposes of section 38, the zero-
emission nuclear power production credit for any taxable year is
an amount equal to the amount by which—
‘‘(1) the product of—
‘‘(A) 0.3 cents, multiplied by
‘‘(B) the kilowatt hours of electricity—
‘‘(i) produced by the taxpayer at a qualified nuclear
power facility, and
‘‘(ii) sold by the taxpayer to an unrelated person
during the taxable year, exceeds
‘‘(2) the reduction amount for such taxable year.
‘‘(b) DEFINITIONS.—
‘‘(1) QUALIFIED NUCLEAR POWER FACILITY.—For purposes
of this section, the term ‘qualified nuclear power facility’ means
any nuclear facility—
‘‘(A) which is owned by the taxpayer and which uses
nuclear energy to produce electricity,
‘‘(B) which is not an advanced nuclear power facility
as defined in subsection (d)(1) of section 45J, and
‘‘(C) which is placed in service before the date of the
enactment of this section.
‘‘(2) REDUCTION AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of this section, the
term ‘reduction amount’ means, with respect to any quali-
fied nuclear power facility for any taxable year, the amount
equal to the lesser of—
‘‘(i) the amount determined under subsection (a)(1),
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or
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136 STAT. 1930 PUBLIC LAW 117–169—AUG. 16, 2022
‘‘(ii) the amount equal to 16 percent of the excess
of—
‘‘(I) subject to subparagraph (B), the gross
receipts from any electricity produced by such
facility (including any electricity services or prod-
ucts provided in conjunction with the electricity
produced by such facility) and sold to an unrelated
person during such taxable year, over
‘‘(II) the amount equal to the product of—
‘‘(aa) 2.5 cents, multiplied by
‘‘(bb) the amount determined under sub-
section (a)(1)(B).
‘‘(B) TREATMENT OF CERTAIN RECEIPTS.—
‘‘(i) IN GENERAL.—Subject to clause (iii), the
amount determined under subparagraph (A)(ii)(I) shall
include any amount received by the taxpayer during
the taxable year with respect to the qualified nuclear
power facility from a zero-emission credit program.
Determination. For purposes of determining the amount received
during such taxable year, the taxpayer shall take into
account any reductions required under such program.
‘‘(ii) ZERO-EMISSION CREDIT PROGRAM.—For pur-
poses of this subparagraph, the term ‘zero-emission
credit program’ means any payments with respect to
a qualified nuclear power facility as a result of any
Federal, State or local government program for, in
whole or in part, the zero-emission, zero-carbon, or
air quality attributes of any portion of the electricity
produced by such facility.
‘‘(iii) EXCLUSION.—For purposes of clause (i), any
amount received by the taxpayer from a zero-emission
credit program shall be excluded from the amount
determined under subparagraph (A)(ii)(I) if the full
amount of the credit calculated pursuant to subsection
(a) (determined without regard to this subparagraph)
is used to reduce payments from such zero-emission
credit program.
‘‘(3) ELECTRICITY.—For purposes of this section, the term
‘electricity’ means the energy produced by a qualified nuclear
power facility from the conversion of nuclear fuel into electric
power.
‘‘(c) OTHER RULES.—
‘‘(1) INFLATION ADJUSTMENT.—The 0.3 cent amount in sub-
section (a)(1)(A) and the 2.5 cent amount in subsection
(b)(2)(A)(ii)(II)(aa) shall each be adjusted by multiplying such
amount by the inflation adjustment factor (as determined under
section 45(e)(2), as applied by substituting ‘calendar year 2023’
for ‘calendar year 1992’ in subparagraph (B) thereof) for the
calendar year in which the sale occurs. If the 0.3 cent amount
as increased under this paragraph is not a multiple of 0.05
cent, such amount shall be rounded to the nearest multiple
of 0.05 cent. If the 2.5 cent amount as increased under this
paragraph is not a multiple of 0.1 cent, such amount shall
be rounded to the nearest multiple of 0.1 cent.
Applicability. ‘‘(2) SPECIAL RULES.—Rules similar to the rules of para-
graphs (1), (3), (4), and (5) of section 45(e) shall apply for
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purposes of this section.
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1931
‘‘(d) WAGE REQUIREMENTS.—
‘‘(1) INCREASED CREDIT AMOUNT FOR QUALIFIED NUCLEAR
POWER FACILITIES.—In the case of any qualified nuclear power
facility which satisfies the requirements of paragraph (2)(A),
the amount of the credit determined under subsection (a) shall
be equal to such amount (as determined without regard to
this sentence) multiplied by 5.
‘‘(2) PREVAILING WAGE REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements described in this Determination.
subparagraph with respect to any qualified nuclear power
facility are that the taxpayer shall ensure that any laborers
and mechanics employed by the taxpayer or any contractor
or subcontractor in the alteration or repair of such facility
shall be paid wages at rates not less than the prevailing
rates for alteration or repair of a similar character in
the locality in which such facility is located as most recently
determined by the Secretary of Labor, in accordance with
subchapter IV of chapter 31 of title 40, United States
Code.
‘‘(B) CORRECTION AND PENALTY RELATED TO FAILURE
TO SATISFY WAGE REQUIREMENTS.—Rules similar to the Applicability.
rules of section 45(b)(7)(B) shall apply.
‘‘(3) REGULATIONS AND GUIDANCE.—The Secretary shall Determination.
issue such regulations or other guidance as the Secretary deter- Requirements.
mines necessary to carry out the purposes of this subsection, Records.
including regulations or other guidance which provides for
requirements for recordkeeping or information reporting for
purposes of administering the requirements of this subsection.
‘‘(e) TERMINATION.—This section shall not apply to taxable years
beginning after December 31, 2032.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 38(b) is amended— 26 USC 38.
(A) in paragraph (32), by striking ‘‘plus’’ at the end,
(B) in paragraph (33), by striking the period at the
end and inserting ‘‘, plus’’, and
(C) by adding at the end the following new paragraph:
‘‘(34) the zero-emission nuclear power production credit
determined under section 45U(a).’’.
(2) The table of sections for subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end the 26 USC 38 prec.
following new item:
‘‘Sec. 45U. Zero-emission nuclear power production credit.’’.
(c) EFFECTIVE DATE.—This section shall apply to electricity 26 USC 45U
produced and sold after December 31, 2023, in taxable years begin- note.
ning after such date.
PART 2—CLEAN FUELS
SEC. 13201. EXTENSION OF INCENTIVES FOR BIODIESEL, RENEWABLE
DIESEL AND ALTERNATIVE FUELS.
(a) BIODIESEL AND RENEWABLE DIESEL CREDIT.—Section 40A(g)
is amended by striking ‘‘December 31, 2022’’ and inserting
‘‘December 31, 2024’’.
(b) BIODIESEL MIXTURE CREDIT.—
(1) IN GENERAL.—Section 6426(c)(6) is amended by striking
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‘‘December 31, 2022’’ and inserting ‘‘December 31, 2024’’.
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136 STAT. 1932 PUBLIC LAW 117–169—AUG. 16, 2022
(2) FUELS NOT USED FOR TAXABLE PURPOSES.—Section
26 USC 6427. 6427(e)(6)(B) is amended by striking ‘‘December 31, 2022’’ and
inserting ‘‘December 31, 2024’’.
(c) ALTERNATIVE FUEL CREDIT.—Section 6426(d)(5) is amended
by striking ‘‘December 31, 2021’’ and inserting ‘‘December 31, 2024’’.
(d) ALTERNATIVE FUEL MIXTURE CREDIT.—Section 6426(e)(3)
is amended by striking ‘‘December 31, 2021’’ and inserting
‘‘December 31, 2024’’.
(e) PAYMENTS FOR ALTERNATIVE FUELS.—Section 6427(e)(6)(C)
is amended by striking ‘‘December 31, 2021’’ and inserting
‘‘December 31, 2024’’.
26 USC 40A note. (f) EFFECTIVE DATE.—The amendments made by this section
shall apply to fuel sold or used after December 31, 2021.
Effective date. (g) SPECIAL RULE.—In the case of any alternative fuel credit
Deadlines. properly determined under section 6426(d) of the Internal Revenue
Claims. Code of 1986 for the period beginning on January 1, 2022, and
26 USC 6426
note. ending with the close of the last calendar quarter beginning before
the date of the enactment of this Act, such credit shall be allowed,
and any refund or payment attributable to such credit (including
any payment under section 6427(e) of such Code) shall be made,
only in such manner as the Secretary of the Treasury (or the
Guidelines. Secretary’s delegate) shall provide. Such Secretary shall issue guid-
ance within 30 days after the date of the enactment of this Act
providing for a one-time submission of claims covering periods
Guidelines. described in the preceding sentence. Such guidance shall provide
for a 180-day period for the submission of such claims (in such
manner as prescribed by such Secretary) to begin not later than
30 days after such guidance is issued. Such claims shall be paid
Determination. by such Secretary not later than 60 days after receipt. If such
Secretary has not paid pursuant to a claim filed under this sub-
section within 60 days after the date of the filing of such claim,
the claim shall be paid with interest from such date determined
by using the overpayment rate and method under section 6621
of such Code.
SEC. 13202. EXTENSION OF SECOND GENERATION BIOFUEL INCEN-
TIVES.
(a) IN GENERAL.—Section 40(b)(6)(J)(i) is amended by striking
‘‘2022’’ and inserting ‘‘2025’’.
26 USC 40 note. (b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to qualified second generation biofuel production after
December 31, 2021.
SEC. 13203. SUSTAINABLE AVIATION FUEL CREDIT.
(a) IN GENERAL.—Subpart D of part IV of subchapter A of
chapter 1 is amended by inserting after section 40A the following
new section:
Definitions. ‘‘SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT.
26 USC 40B.
‘‘(a) IN GENERAL.—For purposes of section 38, the sustainable
aviation fuel credit determined under this section for the taxable
year is, with respect to any sale or use of a qualified mixture
which occurs during such taxable year, an amount equal to the
product of—
‘‘(1) the number of gallons of sustainable aviation fuel
in such mixture, multiplied by
‘‘(2) the sum of—
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‘‘(A) $1.25, plus
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1933
‘‘(B) the applicable supplementary amount with respect Applicability.
to such sustainable aviation fuel.
‘‘(b) APPLICABLE SUPPLEMENTARY AMOUNT.—For purposes of
this section, the term ‘applicable supplementary amount’ means,
with respect to any sustainable aviation fuel, an amount equal
to $0.01 for each percentage point by which the lifecycle greenhouse
gas emissions reduction percentage with respect to such fuel exceeds
50 percent. In no event shall the applicable supplementary amount
determined under this subsection exceed $0.50.
‘‘(c) QUALIFIED MIXTURE.—For purposes of this section, the
term ‘qualified mixture’ means a mixture of sustainable aviation
fuel and kerosene if—
‘‘(1) such mixture is produced by the taxpayer in the United
States,
‘‘(2) such mixture is used by the taxpayer (or sold by
the taxpayer for use) in an aircraft,
‘‘(3) such sale or use is in the ordinary course of a trade
or business of the taxpayer, and
‘‘(4) the transfer of such mixture to the fuel tank of such
aircraft occurs in the United States.
‘‘(d) SUSTAINABLE AVIATION FUEL.—
‘‘(1) IN GENERAL.—For purposes of this section, the term
‘sustainable aviation fuel’ means liquid fuel, the portion of
which is not kerosene, which—
‘‘(A) meets the requirements of—
‘‘(i) ASTM International Standard D7566, or
‘‘(ii) the Fischer Tropsch provisions of ASTM Inter-
national Standard D1655, Annex A1,
‘‘(B) is not derived from coprocessing an applicable
material (or materials derived from an applicable material)
with a feedstock which is not biomass,
‘‘(C) is not derived from palm fatty acid distillates
or petroleum, and
‘‘(D) has been certified in accordance with subsection
(e) as having a lifecycle greenhouse gas emissions reduction
percentage of at least 50 percent.
‘‘(2) DEFINITIONS.—In this subsection—
‘‘(A) APPLICABLE MATERIAL.—The term ‘applicable
material’ means—
‘‘(i) monoglycerides, diglycerides, and triglycerides,
‘‘(ii) free fatty acids, and
‘‘(iii) fatty acid esters.
‘‘(B) BIOMASS.—The term ‘biomass’ has the same
meaning given such term in section 45K(c)(3).
‘‘(e) LIFECYCLE GREENHOUSE GAS EMISSIONS REDUCTION
PERCENTAGE.—For purposes of this section, the term ‘lifecycle
greenhouse gas emissions reduction percentage’ means, with respect
to any sustainable aviation fuel, the percentage reduction in lifecycle
greenhouse gas emissions achieved by such fuel as compared with
petroleum-based jet fuel, as defined in accordance with—
‘‘(1) the most recent Carbon Offsetting and Reduction
Scheme for International Aviation which has been adopted
by the International Civil Aviation Organization with the agree-
ment of the United States, or
‘‘(2) any similar methodology which satisfies the criteria
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under section 211(o)(1)(H) of the Clean Air Act (42 U.S.C.
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136 STAT. 1934 PUBLIC LAW 117–169—AUG. 16, 2022
7545(o)(1)(H)), as in effect on the date of enactment of this
section.
‘‘(f) REGISTRATION OF SUSTAINABLE AVIATION FUEL PRO-
DUCERS.—No credit shall be allowed under this section with respect
to any sustainable aviation fuel unless the producer or importer
of such fuel—
‘‘(1) is registered with the Secretary under section 4101,
and
‘‘(2) provides—
Certification. ‘‘(A) certification (in such form and manner as the
Compliance. Secretary shall prescribe) from an unrelated party dem-
Requirements. onstrating compliance with—
‘‘(i) any general requirements, supply chain
traceability requirements, and information trans-
mission requirements established under the Carbon
Offsetting and Reduction Scheme for International
Aviation described in paragraph (1) of subsection (e),
or
‘‘(ii) in the case of any methodology established
under paragraph (2) of such subsection, requirements
similar to the requirements described in clause (i),
and
‘‘(B) such other information with respect to such fuel
as the Secretary may require for purposes of carrying out
this section.
‘‘(g) COORDINATION WITH CREDIT AGAINST EXCISE TAX.—The
amount of the credit determined under this section with respect
to any sustainable aviation fuel shall, under rules prescribed by
the Secretary, be properly reduced to take into account any benefit
provided with respect to such sustainable aviation fuel solely by
reason of the application of section 6426 or 6427(e).
‘‘(h) TERMINATION.—This section shall not apply to any sale
or use after December 31, 2024.’’.
(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT.— Section
26 USC 38. 38(b), as amended by the preceding provisions of this Act, is
amended by striking ‘‘plus’’ at the end of paragraph (33), by striking
the period at the end of paragraph (34) and inserting ‘‘, plus’’,
and by inserting after paragraph (34) the following new paragraph:
‘‘(35) the sustainable aviation fuel credit determined under
section 40B.’’.
(c) COORDINATION WITH BIODIESEL INCENTIVES.—
(1) IN GENERAL.—Section 40A(d)(1) is amended by inserting
‘‘or 40B’’ after ‘‘determined under section 40’’.
(2) CONFORMING AMENDMENT.—Section 40A(f) is amended
by striking paragraph (4).
(d) SUSTAINABLE AVIATION FUEL ADDED TO CREDIT FOR
ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE FUEL MIXTURES.—
(1) IN GENERAL.—Section 6426 is amended by adding at
the end the following new subsection:
‘‘(k) SUSTAINABLE AVIATION FUEL CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this section, the sustain-
able aviation fuel credit for the taxable year is, with respect
to any sale or use of a qualified mixture, an amount equal
to the product of—
‘‘(A) the number of gallons of sustainable aviation fuel
in such mixture, multiplied by
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‘‘(B) the sum of—
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PUBLIC LAW 117–169—AUG. 16, 2022 136 STAT. 1935
‘‘(i) $1.25, plus
‘‘(ii) the applicable supplementary amount with Applicability.
respect to such sustainable aviation fuel.
‘‘(2) DEFINITIONS.—Any term used in this subsection which
is also used in section 40B shall have the meaning given
such term by section 40B.
‘‘(3) REGISTRATION REQUIREMENT.—For purposes of this Applicability.
subsection, rules similar to the rules of section 40B(f) shall
apply.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 6426 is amended— 26 USC 6426.
(i) in subsection (a)(1), by striking ‘‘and (e)’’ and
inserting ‘‘(e), and (k)’’, and
(ii) in subsection (h), by striking ‘‘under section
40 or 40A’’ and inserting ‘‘under section 40, 40A, or
40B’’.
(B) Section 6427(e) is amended—
(i) in the heading, by striking ‘‘OR ALTERNATIVE
FUEL’’ and inserting, ‘‘ALTERNATIVE FUEL, OR SUSTAIN-
ABLE AVIATION FUEL’’,
(ii) in paragraph (1), by inserting ‘‘or the sustain-
able aviation fuel mixture credit’’ after ‘‘alternative
fuel mixture credit’’, and
(iii) in paragraph (6)—
(I) in subparagraph (C), by striking ‘‘and’’ at
the end,
(II) in subparagraph (D), by striking the period
at the end and inserting ‘‘, and’’, and
(III) by adding at the end the following new
subparagraph:
‘‘(E) any qualified mixture of sustainable aviation fuel
(as defined in section 6426(k)(3)) sold or used after
December 31, 2024.’’.
(C) Section 4101(a)(1) is amended by inserting ‘‘every
person producing or importing sustainable aviation fuel
(as defined in section 40B),’’ before ‘‘and every person pro-
ducing second generation biofuel’’.
(D) The table of sections for subpart D of subchapter
A of chapter 1 is amended by inserting after the item 26 USC 38 prec.
relating to section 40A the following new item:
‘‘Sec. 40B. Sustainable aviation fuel credit.’’.
(e) AMOUNT OF CREDIT INCLUDED IN GROSS INCOME.—Section
87 is amended by striking ‘‘and’’ in paragraph (1), by striking
the period at the end of paragraph (2) and inserting ‘‘, and’’, and
by adding at the end the following new paragraph:
‘‘(3) the sustainable aviation fuel credit determined with
respect to the taxpayer for the taxable year under section
40B(a).’’.
(f) EFFECTIVE DATE.—The amendments made by this section 26 USC 40B note.
shall apply to fuel sold or used after December 31, 2022.
SEC. 13204. CLEAN HYDROGEN.
(a) CREDIT FOR PRODUCTION OF CLEAN HYDROGEN.—
(1) IN GENERAL.—Subpart D of part IV of subchapter A
of chapter 1, as amended by the preceding provisions of this
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Act, is amended by adding at the end the following new section:
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