---
kind: "section"
citation: "42 U.S.C. § 1395w–111"
title: "42"
title_heading: "The Public Health and Welfare"
number: "1395w–111"
heading: "PDP regions; submission of bids; plan approval"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/1395w-111"
units:
  - "Chapter 7 — Social Security"
  - "Subchapter XVIII — Health Insurance for Aged and Disabled"
  - "Part D — Voluntary Prescription Drug Benefit Program"
  - "Subpart 2 — prescription drug plans; pdp sponsors; financing"
---

# §1395w–111. PDP regions; submission of bids; plan approval

- (a) **Establishment of PDP regions; service areas—**
  - (1) **Coverage of entire PDP region—** The service area for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall consist of an entire [PDP region](/usc/42/1395w–151.md?p=a-12) established under [paragraph (2)](#a-2).
  - (2) **Establishment of PDP regions—**
    - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish, and may revise, [PDP regions](/usc/42/1395w–151.md?p=a-12) in a manner that is consistent with the requirements for the establishment and revision of MA regions under subparagraphs (B) and (C) of [section 1395w–27a(a)(2) of this title](/usc/42/1395w–27a.md?p=a-2).
    - (B) **Relation to MA regions—** To the extent practicable, [PDP regions](/usc/42/1395w–151.md?p=a-12) shall be the same as MA regions under [section 1395w–27a(a)(2) of this title](/usc/42/1395w–27a.md?p=a-2). The [Secretary](/usc/42/1301.md?p=a-6) may establish [PDP regions](/usc/42/1395w–151.md?p=a-12) which are not the same as MA regions if the [Secretary](/usc/42/1301.md?p=a-6) determines that the establishment of different regions under this part would improve access to benefits under this part.
    - (C) **Authority for territories—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish, and may revise, [PDP regions](/usc/42/1395w–151.md?p=a-12) for areas in [States](/usc/42/619.md?p=5) that are not within the 50 [States](/usc/42/619.md?p=5) or the District of Columbia.
  - (3) **National plan—** Nothing in this subsection shall be construed as preventing a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) from being offered in more than one [PDP region](/usc/42/1395w–151.md?p=a-12) ([including](/usc/42/1301.md?p=b) all [PDP regions](/usc/42/1395w–151.md?p=a-12)).
- (b) **Submission of bids, premiums, and related information—**
  - (1) **In general—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall submit to the [Secretary](/usc/42/1301.md?p=a-6) information described in [paragraph (2)](#b-2) with respect to each [prescription drug plan](/usc/42/1395w–151.md?p=a-14) it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a) is submitted by an MA organization under [paragraph (1)](/usc/42/1395w–24.md?p=a-1) of such section.
  - (2) **Information described—** The information described in this paragraph is information on the following:
    - (A) **Coverage provided—** The prescription [drug](/usc/42/11851.md?p=4) coverage provided under the plan, [including](/usc/42/1301.md?p=b) the deductible and other cost-sharing.
    - (B) **Actuarial value—** The actuarial value of the [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15) in the region for a [part D eligible individual](/usc/42/1395w–151.md?p=a-4) with a national average risk profile for the factors described in [section 1395w–115(c)(1)(A) of this title](/usc/42/1395w–115.md?p=c-1-A) (as specified by the [Secretary](/usc/42/1301.md?p=a-6)).
    - (C) **Bid—** Information on the bid, [including](/usc/42/1301.md?p=b) an actuarial certification of—
      - (i) the basis for the actuarial value described in [subparagraph (B)](#b-2-B) assumed in such bid;
      - (ii) the portion of such bid attributable to [basic prescription drug coverage](/usc/42/1395w–151.md?p=a-1) and, if applicable, the portion of such bid attributable to supplemental benefits;
      - (iii) assumptions regarding the reinsurance subsidy payments provided under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b) subtracted from the actuarial value to produce such bid; and
      - (iv) administrative expenses assumed in the bid.
    - (D) **Service area—** The service area for the plan.
    - (E) **Level of risk assumed—**
      - (i) **In general—** Whether the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) requires a modification of risk level under [clause (ii)](#b-2-E-ii) and, if so, the extent of such modification. Any such modification shall apply with respect to all [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) in a [PDP region](/usc/42/1395w–151.md?p=a-12). This subparagraph shall not apply to an [MA–PD plan](/usc/42/1395w–151.md?p=a-9).
      - (ii) **Risk levels described—** A modification of risk level under this clause may consist of one or more of the following:
        - (I) **Increase in Federal percentage assumed in initial risk corridor—** An equal percentage point increase in the percents applied under subparagraphs (B)(i), (B)(ii)(I), (C)(i), and (C)(ii)(I) of [section 1395w–115(e)(2) of this title](/usc/42/1395w–115.md?p=e-2). In no case shall the application of previous sentence prevent the application of a higher percentage under [section 1395w–115(e)(2)(B)(iii)](/usc/42/1395w–115.md?p=e-2-B-iii)[^1] of this title.
        - (II) **Increase in Federal percentage assumed in second risk corridor—** An equal percentage point increase in the percents applied under subparagraphs (B)(ii)(II) and (C)(ii)(II) of [section 1395w–115(e)(2) of this title](/usc/42/1395w–115.md?p=e-2).
        - (III) **Decrease in size of risk corridors—** A decrease in the threshold risk percentages specified in [section 1395w–115(e)(3)(C) of this title](/usc/42/1395w–115.md?p=e-3-C).
    - (F) **Additional information—** Such other information as the [Secretary](/usc/42/1301.md?p=a-6) may require to carry out this part.
  - (3) **Paperwork reduction for offering of prescription drug plans nationally or in multi-region areas—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish requirements for information submission under this subsection in a manner that promotes the offering of such plans in more than one [PDP region](/usc/42/1395w–151.md?p=a-12) ([including](/usc/42/1301.md?p=b) all regions) through the filing of consolidated information.
- (c) **Actuarial valuation—**
  - (1) **Processes—** For purposes of this part, the [Secretary](/usc/42/1301.md?p=a-6) shall establish processes and methods for determining the actuarial valuation of prescription [drug](/usc/42/11851.md?p=4) coverage, [including](/usc/42/1301.md?p=b)—
    - (A) an actuarial valuation of [standard prescription drug coverage](/usc/42/1395w–151.md?p=a-16) under [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b);
    - (B) actuarial valuations relating to alternative prescription [drug](/usc/42/11851.md?p=4) coverage under [section 1395w–102(c)(1) of this title](/usc/42/1395w–102.md?p=c-1);
    - (C) an actuarial valuation of the reinsurance subsidy payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b);
    - (D) the use of generally accepted actuarial principles and methodologies; and
    - (E) applying the same methodology for determinations of actuarial valuations under subparagraphs [(A)](#c-1-A) and [(B)](#c-1-B).
  - (2) **Accounting for drug utilization—** Such processes and methods for determining actuarial valuation shall take into account the effect that providing alternative prescription [drug](/usc/42/11851.md?p=4) coverage (rather than [standard prescription drug coverage](/usc/42/1395w–151.md?p=a-16)) has on [drug](/usc/42/11851.md?p=4) utilization.
  - (3) **Responsibilities—**
    - (A) **Plan responsibilities—** [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and MA organizations are responsible for the preparation and submission of actuarial valuations required under this part for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–151.md?p=a-9) they offer.
    - (B) **Use of outside actuaries—** Under the processes and methods established under [paragraph (1)](#c-1), [PDP sponsors](/usc/42/1395w–151.md?p=a-13) offering [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organizations offering [MA–PD plans](/usc/42/1395w–151.md?p=a-9) may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values.
- (d) **Review of information and negotiation—**
  - (1) **Review of information—** The [Secretary](/usc/42/1301.md?p=a-6) shall review the information filed under [subsection (b)](#b) for the purpose of conducting negotiations under [paragraph (2)](#d-2).
  - (2) **Negotiation regarding terms and conditions—** Subject to [subsection (i)](#i), in exercising the authority under [paragraph (1)](#d-1), the [Secretary](/usc/42/1301.md?p=a-6)—
    - (A) has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and
    - (B) has authority similar to the authority of the [Director](/usc/42/11851.md?p=5) of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5.
  - (3) **Rejection of bids—** Paragraph (5)(C) of [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a) shall apply with respect to bids submitted by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under [subsection (b)](#b) in the same manner as such paragraph applies to bids submitted by an MA organization under such [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a).
- (e) **Approval of proposed plans—**
  - (1) **In general—** After review and negotiation under [subsection (d)](#d), the [Secretary](/usc/42/1301.md?p=a-6) shall approve or disapprove the [prescription drug plan](/usc/42/1395w–151.md?p=a-14).
  - (2) **Requirements for approval—** The [Secretary](/usc/42/1301.md?p=a-6) may approve a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) only if the following requirements are met:
    - (A) **Compliance with requirements—** The plan and the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering the plan comply with the requirements under this part, [including](/usc/42/1301.md?p=b) the provision of [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15).
    - (B) **Actuarial determinations—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the plan and [PDP sponsor](/usc/42/1395w–151.md?p=a-13) meet the requirements under this part relating to actuarial determinations, [including](/usc/42/1301.md?p=b) such requirements under [section 1395w–102(c) of this title](/usc/42/1395w–102.md?p=c).
    - (C) **Application of FEHBP standard—**
      - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the portion of the bid submitted under [subsection (b)](#b) that is attributable to [basic prescription drug coverage](/usc/42/1395w–151.md?p=a-1) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of [section 300e–1(8)(C) of this title](/usc/42/300e–1.md?p=8-C)) for benefits provided under that plan, less the sum (determined on a monthly per capita basis) of the actuarial value of the reinsurance payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b).
      - (ii) **Supplemental coverage—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the portion of the bid submitted under [subsection (b)](#b) that is attributable to supplemental prescription [drug](/usc/42/11851.md?p=4) coverage pursuant to [section 1395w–102(a)(2) of this title](/usc/42/1395w–102.md?p=a-2) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of [section 300e–1(8)(C) of this title](/usc/42/300e–1.md?p=8-C)) for such coverage under the plan.
    - (D) **Plan design—**
      - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) does not find that the design of the plan and its benefits ([including](/usc/42/1301.md?p=b) any formulary and tiered formulary structure) are likely to substantially discourage enrollment by certain [part D eligible individuals](/usc/42/1395w–151.md?p=a-4) under the plan.
      - (ii) **Use of categories and classes in formularies—** The [Secretary](/usc/42/1301.md?p=a-6) may not find that the design of categories and classes within a formulary violates [clause (i)](#e-2-D-i) if such categories and classes are consistent with guidelines (if any) for such categories and classes established by the [United States](/usc/42/1301.md?p=a-2) Pharmacopeia.
- (f) **Application of limited risk plans—**
  - (1) **Conditions for approval of limited risk plans—** The [Secretary](/usc/42/1301.md?p=a-6) may only approve a limited risk plan (as defined in [paragraph (4)(A)](#f-4-A)) for a [PDP region](/usc/42/1395w–151.md?p=a-12) if the access requirements under [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a) would not be met for the region but for the approval of such a plan (or a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) under [subsection (g)](#g)).
  - (2) **Rules—** The following rules shall apply with respect to the approval of a limited risk plan in a [PDP region](/usc/42/1395w–151.md?p=a-12):
    - (A) **Limited exercise of authority—** Only the minimum number of such plans may be approved in order to meet the access requirements under [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a).
    - (B) **Maximizing assumption of risk—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide priority in approval for those plans bearing the highest level of risk (as computed by the [Secretary](/usc/42/1301.md?p=a-6)), but the [Secretary](/usc/42/1301.md?p=a-6) may take into account the level of the bids submitted by such plans.
    - (C) **No full underwriting for limited risk plans—** In no case may the [Secretary](/usc/42/1301.md?p=a-6) approve a limited risk plan under which the modification of risk level provides for no (or a de minimis) level of financial risk.
  - (3) **Acceptance of all full risk contracts—** There shall be no limit on the number of full risk plans that are approved under [subsection (e)](#e).
  - (4) **Risk-plans defined—** For purposes of this subsection:
    - (A) **Limited risk plan—** The term “limited risk plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides [basic prescription drug coverage](/usc/42/1395w–151.md?p=a-1) and for which the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) [includes](/usc/42/1301.md?p=b) a modification of risk level described in [subparagraph (E)](#b-2-E) of subsection (b)(2) in its bid submitted for the plan under such subsection. Such term does not include a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5).
    - (B) **Full risk plan—** The term “full risk plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that is not a limited risk plan or a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5).
- (g) **Guaranteeing access to coverage—**
  - (1) **Solicitation of bids—**
    - (A) **In general—** Separate from the bidding process under [subsection (b)](#b), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for a process for the solicitation of bids from eligible fallback entities (as defined in [paragraph (2)](#g-2)) for the offering in all fallback service areas (as defined in [paragraph (3)](#g-3)) in one or more [PDP regions](/usc/42/1395w–151.md?p=a-12) of a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) (as defined in [paragraph (4)](#g-4)) during the contract period specified in [paragraph (5)](#g-5).
    - (B) **Acceptance of bids—**
      - (i) **In general—** Except as provided in this subparagraph, the provisions of [subsection (e)](#e) shall apply with respect to the approval or disapproval of [fallback prescription drug plans](/usc/42/1395w–151.md?p=a-5). The [Secretary](/usc/42/1301.md?p=a-6) shall enter into contracts under this subsection with eligible fallback entities for the offering of [fallback prescription drug plans](/usc/42/1395w–151.md?p=a-5) so approved in fallback service areas.
      - (ii) **Limitation of 1 plan for all fallback service areas in a PDP region—** With respect to all fallback service areas in any [PDP region](/usc/42/1395w–151.md?p=a-12) for a contract period, the [Secretary](/usc/42/1301.md?p=a-6) shall approve the offering of only 1 [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5).
      - (iii) **Competitive procedures—** Competitive procedures (as defined in [section 132 of title 41](/usc/41/132.md)) shall be used to enter into a contract under this subsection. The provisions of subsection (d) of [section 1395kk–1 of this title](/usc/42/1395kk–1.md) shall apply to a contract under this section in the same manner as they apply to a contract under such section.
      - (iv) **Timing—** The [Secretary](/usc/42/1301.md?p=a-6) shall approve a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) for a [PDP region](/usc/42/1395w–151.md?p=a-12) in a manner so that, if there are any fallback service areas in the region for a year, the [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) is offered at the same time as [prescription drug plans](/usc/42/1395w–151.md?p=a-14) would otherwise be offered.
      - (V) **2 No national fallback plan—** The [Secretary](/usc/42/1301.md?p=a-6) shall not enter into a contract with a single fallback entity for the offering of fallback plans throughout the [United States](/usc/42/1301.md?p=a-2).
  - (2) **Eligible fallback entity—** For purposes of this section, the term “eligible fallback entity” means, with respect to all fallback service areas in a [PDP region](/usc/42/1395w–151.md?p=a-12) for a contract period, an entity that—
    - (A) meets the requirements to be a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and
    - (B) does not submit a bid under [subsection (b)](#b) for any [prescription drug plan](/usc/42/1395w–151.md?p=a-14) for any [PDP region](/usc/42/1395w–151.md?p=a-12) for the first year of such contract period.

    For purposes of [subparagraph (B)](#g-2-B), an entity shall be treated as submitting a bid with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) if the entity is acting as a subcontractor of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14).

  - (3) **Fallback service area—** For purposes of this subsection, the term “fallback service area” means, for a [PDP region](/usc/42/1395w–151.md?p=a-12) with respect to a year, any area within such region for which the [Secretary](/usc/42/1301.md?p=a-6) determines before the beginning of the year that the access requirements of the first sentence of [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a) will not be met for [part D eligible individuals](/usc/42/1395w–151.md?p=a-4) residing in the area for the year.
  - (4) **Fallback prescription drug plan—** For purposes of this part, the term “[fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5)” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that—
    - (A) only offers the [standard prescription drug coverage](/usc/42/1395w–151.md?p=a-16) and access to negotiated prices described in [section 1395w–102(a)(1)(A) of this title](/usc/42/1395w–102.md?p=a-1-A) and does not include any supplemental prescription [drug](/usc/42/11851.md?p=4) coverage; and
    - (B) meets such other requirements as the [Secretary](/usc/42/1301.md?p=a-6) may specify.
  - (5) **Payments under the contract—**
    - (A) **In general—** A contract entered into under this subsection shall provide for—
      - (i) payment for the actual costs (taking into account negotiated price concessions described in [section 1395w–102(d)(1)(B) of this title](/usc/42/1395w–102.md?p=d-1-B)) of [covered part D drugs](/usc/42/1395w–151.md?p=a-2) provided to [part D eligible individuals](/usc/42/1395w–151.md?p=a-4) enrolled in a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) offered by the entity; and
      - (ii) payment of management fees that are tied to performance measures established by the [Secretary](/usc/42/1301.md?p=a-6) for the management, [administration](/usc/42/1301.md?p=a-10), and delivery of the benefits under the contract.
    - (B) **Performance measures—** The performance measures established by the [Secretary](/usc/42/1301.md?p=a-6) pursuant to [subparagraph (A)(ii)](#g-5-A-ii) shall include at least measures for each of the following:
      - (i) **Costs—** The entity contains costs to the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) and to [part D eligible individuals](/usc/42/1395w–151.md?p=a-4) enrolled in a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) offered by the entity through mechanisms such as generic substitution and price discounts.
      - (ii) **Quality programs—** The entity provides such enrollees with quality programs that avoid adverse [drug](/usc/42/11851.md?p=4) reactions and overutilization and reduce medical errors.
      - (iii) **Customer service—** The entity provides timely and accurate delivery of services and pharmacy and beneficiary support services.
      - (iv) **Benefit administration and claims adjudication—** The entity provides efficient and effective benefit [administration](/usc/42/1301.md?p=a-10) and claims adjudication.
  - (6) **Monthly beneficiary premium—** Except as provided in [section 1395w–113(b) of this title](/usc/42/1395w–113.md?p=b) (relating to late enrollment penalty) and subject to [section 1395w–114 of this title](/usc/42/1395w–114.md) (relating to low-income assistance), the monthly beneficiary premium to be charged under a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) offered in all fallback service areas in a [PDP region](/usc/42/1395w–151.md?p=a-12) shall be uniform and shall be equal to 25.5 percent (or, for 2030 and each subsequent year, the percent specified under [section 1395w–113(a)(9) of this title](/usc/42/1395w–113.md?p=a-9)) of an amount equal to the [Secretary](/usc/42/1301.md?p=a-6)’s estimate of the average monthly per capita actuarial cost, [including](/usc/42/1301.md?p=b) administrative expenses, under the [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) of providing coverage in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) that are not [fallback prescription drug plans](/usc/42/1395w–151.md?p=a-5).
  - (7) **General contract terms and conditions—**
    - (A) **In general—** Except as may be appropriate to carry out this section, the terms and conditions of contracts with eligible fallback entities offering [fallback prescription drug plans](/usc/42/1395w–151.md?p=a-5) under this subsection shall be the same as the terms and conditions of contracts under this part for [prescription drug plans](/usc/42/1395w–151.md?p=a-14).
    - (B) **Period of contract—**
      - (i) **In general—** Subject to [clause (ii)](#g-7-B-ii), a contract approved for a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) for fallback service areas for a [PDP region](/usc/42/1395w–151.md?p=a-12) under this section shall be for a period of 3 years (except as may be renewed after a subsequent bidding process).
      - (ii) **Limitation—** A [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5) may be offered under a contract in an area for a year only if that area is a fallback service area for that year.
    - (C) **Entity not permitted to market or brand fallback prescription drug plans—** An eligible fallback entity with a contract under this subsection may not engage in any marketing or branding of a [fallback prescription drug plan](/usc/42/1395w–151.md?p=a-5).
- (h) **Annual report on use of limited risk plans and fallback plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall submit to Congress an annual report that describes instances in which limited risk plans and [fallback prescription drug plans](/usc/42/1395w–151.md?p=a-5) were offered under subsections [(f)](#f) and [(g)](#g). The [Secretary](/usc/42/1301.md?p=a-6) shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under section subsection[^3] (f).
- (i) **Noninterference—** In order to promote competition under this part and in carrying out this part, the [Secretary](/usc/42/1301.md?p=a-6)—
  - (1) may not interfere with the negotiations between [drug](/usc/42/11851.md?p=4) manufacturers and pharmacies and [PDP sponsors](/usc/42/1395w–151.md?p=a-13);
  - (2) may not require a particular formulary, except as provided under [section 1395w–104(b)(3)(l)](/usc/42/1395w–104.md)[^4] of this title; and
  - (3) may not institute a price structure for the reimbursement of [covered part D drugs](/usc/42/1395w–151.md?p=a-2), except as provided under part E of subchapter XI.
- (j) **Coordination of benefits—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall permit [State Pharmaceutical Assistance Programs](/usc/42/1395w–151.md?p=a-17) and Rx plans under sections [1395w–133](/usc/42/1395w–133.md) and [1395w–134](/usc/42/1395w–134.md) of this title to coordinate benefits with the plan and, in connection with such coordination with such a Program, not to impose fees that are unrelated to the cost of coordination.

## Footnotes

[^1]: See References in Text note below.
[^2]: So in original. Probably should be “(v)”.
[^3]: So in original.
[^4]: So in original. Probably should be “(b)(3)(I)”.

## Source credit

(Aug. 14, 1935, ch. 531, title XVIII, § 1860D–11, as added Pub. L. 108–173, title I, § 101(a)(2), Dec. 8, 2003, 117 Stat. 2092; amended Pub. L. 111–148, title III, § 3209(b), Mar. 23, 2010, 124 Stat. 460; Pub. L. 117–169, title I, §§ 11001(b)(1)(C), 11201(d)(3)(B), Aug. 16, 2022, 136 Stat. 1852, 1890.)

## Notes

### Editorial Notes

### References in Text

Section 1395w–115(e)(2)(B)(iii) of this title, referred to in subsec. (b)(2)(E)(ii)(I), was in the original “section 1869D–15(e)(2)(B)(iii)”, and was translated as reading “section 1860D–15(e)(2)(B)(iii)”, meaning 1860D–15(e)(2)(B)(iii) of the Social Security Act, to reflect the probable intent of Congress, because the Social Security Act does not contain a section 1869D–15 and section 1395w–115(e)(2)(B)(iii) of this title provides for an application of a higher percentage for years 2006 and 2007.

### Codification

In subsec. (g)(1)(B)(iii), “section 132 of title 41” substituted for “section 4(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(5))” on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts.

### Amendments

2022—Subsec. (g)(6). Pub. L. 117–169, § 11201(d)(3)(B), inserted “(or, for 2030 and each subsequent year, the percent specified under section 1395w–113(a)(9) of this title)” after “25.5 percent”.

Subsec. (i)(1). Pub. L. 117–169, § 11001(b)(1)(C)(i), struck out “and” at end.

Subsec. (i)(2). Pub. L. 117–169, § 11001(b)(1)(C)(ii), substituted “, except as provided under section 1395w–104(b)(3)(l) of this title; and” for “or institute a price structure for the reimbursement of covered part D drugs.”

Subsec. (i)(3). Pub. L. 117–169, § 11001(b)(1)(C)(iii), added par. (3).

2010—Subsec. (d)(3). Pub. L. 111–148 added par. (3).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–148 applicable to bids submitted for contract years beginning on or after Jan. 1, 2011, see section 3209(c) of Pub. L. 111–148, set out as a note under section 1395w–24 of this title.

### Study Regarding Regional Variations in Prescription Drug Spending

Pub. L. 108–173, title I, § 107(a), Dec. 8, 2003, 117 Stat. 2169, provided that: In general.—The Secretary [of Health and Human Services] shall conduct a study that examines variations in per capita spending for covered part D drugs under part D of title XVIII of the Social Security Act [42 U.S.C. 1395w–101 et seq.] among PDP regions and, with respect to such spending, the amount of such variation that is attributable to— price variations (described in section 1860D–15(c)(2) of such Act [42 U.S.C. 1395w–115(c)(2)]); and differences in per capita utilization that is not taken into account in the health status risk adjustment provided under section 1860D–15(c)(1) of such Act [42 U.S.C. 1395w–115(c)(1)]. Report and recommendations.—Not later than January 1, 2009, the Secretary shall submit to Congress a report on the study conducted under paragraph (1). Such report shall include— information regarding the extent of geographic variation described in paragraph (1)(B); an analysis of the impact on direct subsidies under section 1860D–15(a)(1) of the Social Security Act [42 U.S.C. 1395w–115(a)(1)] in different PDP regions if such subsidies were adjusted to take into account the variation described in subparagraph (A); and recommendations regarding the appropriateness of applying an additional geographic adjustment factor under section 1860D–15(c)(2) [42 U.S.C. 1395w–115(c)(2)] that reflects some or all of the variation described in subparagraph (A).”