Discarded Drugs

Discarded Drug Refund

Section 90004 of the Infrastructure Investment and Jobs Act (Pub. L. 117–58, November 15, 2021) requires manufacturers to provide a refund to CMS for certain discarded amounts from a refundable single-dose container or single-use package drug.  The refund amount is the amount of discarded drug that exceeds an applicable percentage, which is required to be at least 10 percent, of total charges for the drug in a given calendar quarter.

Refundable single-dose container or single-use package drugs approved or licensed by FDA on or after November 15, 2021 are excluded from the definition of refundable single-dose container or single-use package, and thus, not subject to a refund, for the first 6 full calendar quarters following the date of first reported sale for any NDCs of such drug (see 87 FR 69719 through 69724).

JW and JZ Modifier Policy

Beginning on January 1, 2017, CMS revised the JW modifier policy to require the uniform use of the modifier for all claims for separately payable drugs with discarded drug amounts from single use vials or single use packages payable under Part B in order to more effectively identify and monitor billing and payment for discarded amounts of drugs. 

In the CY 2023 PFS final rule (87 FR 69710 through 69734), we finalized the requirement that billing providers and suppliers report the JW modifier for all separately payable drugs with discarded drug amounts from single use vials or single use packages payable under Part B, beginning January 1, 2023. We also finalized the requirement that billing providers and suppliers report the JZ modifier for all such drugs with no discarded amounts beginning no later than July 1, 2023, and we stated that we would begin claims edits for both the JW and JZ modifiers beginning October 1, 2023 (87 FR 69718 through 69719). 

JW - JZ Modifier FAQs 

JW - JZ Modifier FAQs (PDF) 

CMS requires providers and suppliers to report the JW modifier on all claims that bill for drugs and biologicals separately payable under Part B with unused and discarded amounts from single-dose containers or single-use packages. If there’s no discarded amounts from single-dose containers or single-use packages, report the claim with the JZ modifier.

JW Modifier and JZ Modifier Policy HCPCS Codes 

JW Modifier and JZ Modifier Policy HCPCS Codes (PDF) (Updated 03/07/2024)

A non-exhaustive list of specific billing and payment codes to which only single-dose containers are assigned, and thus may require use of the JW or JZ modifiers depending on the setting of use.

42 CFR 414.940

42 CFR 414.940

Drugs with Increased Applicable Percentage

Drugs with Increased Applicable Percentage (PDF)

The list showcases drugs with an increased applicable percentage as described at 42 CFR 414.940(d)(2), (3), and (4). 

Increased applicable percentage for orphan drugs as described at 42 CFR 414.940(d)(5) will be determined using claims data for the calendar year in which the refund quarter occurs and communicated in reports to manufacturers (see 42 CFR 414.940(a)).

Application for increased applicable percentages 

Manufacturers that seek an increased applicable percentage must submit the following by February 1 of the calendar year prior to the year the increased applicable percentage would apply: 

1. a written request that a drug be considered for an increased applicable percentage based on its unique circumstances; 

2. FDA-approved labeling for the drug, or, if the drug is not yet approved, documentation of the FDA acceptance of the application for review; 

3. justification for the consideration of an increased applicable percentage based on such unique circumstances; and 

4. justification for the requested increase in the applicable percentage.

A manufacturer that does not have FDA approval for its product by February 1 must receive FDA approval by August 1 and submit the FDA-approved label to CMS by September 1 for its application to be complete and eligible for consideration for an increased applicable percentage based on unique circumstances. For example, manufacturers of refundable drugs must submit the above four elements of an application by February 1, 2024 in order to have their drug considered for an increased applicable percentage effective January 1, 2025, or, in the case of a drug that does not have FDA approval, all elements except the label by that date, and the FDA-approved label by September 1, 2025.

As required by section 1847A(h)(3)(B), the Secretary may only increase the applicable percentage for a refundable drug that has unique circumstances through notice-and-comment rulemaking. Thus, after reviewing each timely application, we will discuss our analysis and propose increased applicable percentages, if any, in the next PFS rulemaking. We will also summarize any applications for which we determine not to propose an increase in the applicable percentage. 

The following are not considered unique circumstances warranting an increased applicable percentage at this time: weight-based doses, body surface area (BSA)-based doses, varying surface area of a wound, loading doses, escalation or titration doses, tapering doses, and dose adjustments for toxicity (see 88 FR 79057).

All application elements and inquiries must be sent to Sec303ASPdata@cms.hhs.gov.

Information about refund reports and payment of refunds 

Check back soon for information on refund reports and payment of refunds.