Audits of private nonhospital contracts with State and local governments

Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C. 256b(d)(2)(B)) is amended by adding at the end the following: (vi) The conducting of annual audits by the Secretary of contracts between a covered entity described in subparagraph (L) or subparagraph (M) of subsection (a)(4), or subparagraph (O) of such subsection with respect to a rural referral center, that is a private nonprofit hospital subject to the requirements in subsections (a)(4)(L)(i) and (a)(11) and a State or local government for at least 10 percent of all such entities participating in the program under this section. The Secretary shall develop and publicly disclose standards used to determine whether such contracts satisfy the applicable requirements described in subsections (a)(4)(L)(i) and (a)(11) and publicly disclose the findings from such audits. The Secretary shall remove from the program under this section any such entity that does not have a contract in effect with a State or local government that satisfies the applicable requirements set forth in subsections (a)(4)(L)(i) and (a)(11), and such removal shall require such covered entity to promptly conduct an audit supervised by the Secretary to identify discounts on covered outpatient drugs purchased at a discount under this section to which such covered entity was not eligible and provide the written results of such audit to the Secretary and the manufacturer of the affected covered outpatient drug. Such covered entity shall be liable to the manufacturer of such covered outpatient drug in an amount equal to the reduction in the price of the drugs provided under subsection (a)(1), plus interest on such amount, which shall be compounded monthly and equal to the current short-term interest rate as determined by the Federal Reserve for the time period for which the covered entity is liable. Where a covered entity described in this clause knowingly and intentionally violates a requirement in subsection (a)(4)(L)(i) or (a)(11), the covered entity shall be required to pay a civil monetary penalty equal to $1,000 for each claim for a covered outpatient drug that is subject to the violation, which amount shall be adjusted for inflation annually to reflect the rate of change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this clause in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). The Office of Inspector General of the Department of Health and Human Services shall carry out the provisions related to the imposition of civil monetary penalties under this clause..