California Welfare and Institutions Code § 14105.31

For purposes of the Medi-Cal contract drug list, the following definitions shall apply: (a) “Single-source drug” means a drug that is produced and distributed under an original New Drug Application approved by the federal Food and Drug Administration. This shall include a drug marketed by the innovator manufacturer and any cross-licensed producers or distributors operating under the New Drug Application, and shall also include a biological product, except for vaccines, marketed by the innovator manufacturer and any cross-licensed producers or distributors licensed by the federal Food and Drug Administration pursuant to Section 262 of Title 42 of the United States Code. A drug ceases to be a single-source drug when the same drug in the same dosage form and strength manufactured by another manufacturer is approved by the federal Food and Drug Administration under the provisions for an Abbreviated New Drug Application. (b) “Best price” means the negotiated price, or the manufacturer’s lowest price available to any foreign or domestic class of trade organization or entity, including, but not limited to, wholesalers, retailers, hospitals, repackagers, providers, or governmental entities, that contracts with a manufacturer for a specified price for drugs, inclusive of cash discounts, free goods, volume discounts, rebates, and on- or off-invoice discounts or credits, shall be based upon the manufacturer’s commonly used retail package sizes for the drug sold by wholesalers to retail pharmacies. (c) “Manufacturer” means any person, partnership, corporation, or other institution or entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of drugs, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or in the packaging, repackaging, labeling, relabeling, and distribution of drugs. (d) “Price escalator” means a mutually agreed-upon price specified in the contract, to cover anticipated cost increases over the life of the contract. (e) “Medi-Cal pharmacy costs” or “Medi-Cal drug costs” means all reimbursements to pharmacy providers for services or merchandise, including single-source or multiple-source prescription drugs, over-the-counter medications, and medical supplies, or any other costs billed by pharmacy providers under the Medi-Cal program. (f) “Medicaid rebate” means the rebate payment made by drug manufacturers pursuant to Section 1927 of the federal Social Security Act (42 U.S.C. Sec. 1396r-8). (g) “State rebate” means the amount negotiated between the manufacturer and the department for reimbursement by the manufacturer, as specified in the contract, in addition to the Medicaid rebate. (h) “Date of mailing” means the date that is evidenced by the postmark date by the United States Postal Service or other common mail carrier on the envelope. (i) The amendments made to this section by the act that added this subdivision shall be effective no sooner than January 1, 2021. (j) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available.

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