Coverage Gap Discount Program

The Coverage Gap Discount Program (CGDP) makes Drug Manufacturer discounts available to eligible Medicare beneficiaries at the point of sale (POS) when receiving applicable covered Part D drugs while in the coverage gap phase. The CGDP was created by the Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act (ACA), in 2010. The program was enacted to "fill in the gap" by providing additional coverage for Medicare Part D beneficiaries eligible for the CGDP. Prior to the passage of the ACA in 2010, non-low income beneficiaries were required to pay 100 percent of the cost of all drugs purchased within the coverage gap phase, for drug expenditures above the initial coverage limit and below the annual out-of-pocket threshold, which varies slightly based on a particular benefit year.

Beginning on January 1, 2011, eligible beneficiaries in the coverage gap began receiving manufacturer discounts for applicable drugs at the POS. Only those applicable drugs that are covered under a signed Manufacturer Agreement with CMS can be covered under Part D. In order to participate in the CGDP, Drug Manufacturers must sign an agreement with CMS to provide a discount on all of its applicable drugs. After a drug is dispensed to a beneficiary, the pharmacy submits the claim information including any gap discount advanced at the POS to the Part D Sponsor. Then, the Part D Sponsor submits a Prescription Drug Event (PDE) to CMS. The discounts are then aggregated and invoiced to the contracted drug manufacturer on a quarterly basis.