The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:

“Average manufacturer price (AMP).” With respect to a covered prescription drug of the manufacturer for a calendar quarter, the average unit price paid to the manufacturer for the drug by wholesalers for drugs distributed to the retail pharmacy class of trade, except for direct sales to hospitals, health maintenance organizations and wholesalers where the drug is relabeled under that distributor's national drug code number. Federal Supply Schedule prices shall not be included in the calculation of AMP. The term includes cash discounts and all other price reductions, other than rebates under this act and section 1927 of Title XIX of the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), added November 5, 1990 (Public Law 101-508, Title IV, § 4401(a)(3), 104 Stat. 1388-143), which reduce the actual price paid. For bundled or capitated sales, the allocation of the discount shall be made proportionately to the dollar value of the units of each covered prescription drug sold under the bundled or capitated arrangement. The AMP for a quarter shall be adjusted by the manufacturer if cumulative discounts or other arrangements subsequently adjust the prices actually realized.

“Best price.” The lowest price available from the manufacturer during the rebate period to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity or any governmental entity subject to the exclusions and special rules set forth in sections 1902 and 1927(c)(1)(C) of the Social Security Act (49 Stat. 620, 42 U.S.C. §§ 1396c, 1396r-8(c)(1)(C)).

“Bundled or capitated sales.” The packaging of drugs of different types where:

“Consumer Price Index-Urban” or “CPI-U.” A price index compiled by the Bureau of Labor Statistics of the United States Department of Labor for measuring the average change in the prices paid by urban consumers for a fixed market basket of services.

“Covered prescription drug.” A legend drug, insulin, an insulin syringe or an insulin needle eligible for payment by the Commonwealth under PACE, PACENET or designated pharmaceutical programs.

“Depot price.” The price available to any depot of the Federal Government for purchase of drugs from the manufacturer through the depot system of procurement.

“Designated pharmaceutical programs.” The General Assistance Program and the Special Pharmaceutical Benefit Program in the Department of Public Welfare¹ and the End Stage Renal Dialysis Program in the Department of Health.

“Direct seller.” Any person, partnership, corporation, institution or entity engaged in the selling of pharmaceutical products directly to consumers in this Commonwealth.

“Distributor.” A private entity under contract with the original labeler or holder of the national drug code number to manufacture, package or market the covered prescription drug.

“Doing business in this Commonwealth.” The direct or indirect selling or the making of covered prescription drugs available for sale in a continuous and systematic manner with the reasonable expectation that these products will be sold to consumers in this Commonwealth.

“FDA.” The Food and Drug Administration of the Public Health Service of the Department of Health and Human Services.

“General Assistance.” The General Assistance program of the Department of Public Welfare of the Commonwealth.

“Innovator multiple-source drugs.” A multiple-source drug that was originally marketed under a new drug application approved by the FDA. The term includes:

“National drug code number.” The identifying drug number maintained by the FDA. The complete 11-digit number must include the labeler code, product code and package size code.

“New drug.” A covered prescription drug approved as a new drug under section 201(p) of the Federal Food, Drug, and Cosmetic Act (52 Stat. 1040, 21 U.S.C. § 321(p)).

“Noninnovator multiple-source drug.” Any of the following:

“PACE.” The program under Chapter 5.

“PACENET.” The program established under section 519.³

“Private entity.” Includes a for-profit entity and a nonprofit entity.

“Producer Price Index for Pharmaceuticals.” The prescription drug producer price index compiled by the Bureau of Labor Statistics of the United States Department of Labor for measuring average changes in selling prices received by domestic drug manufacturers.

“Provider.” A licensed pharmacy, dispensing physician or certified registered nurse practitioner enrolled as a provider in PACE, PACENET or designated pharmaceutical programs.

“Rebate period.” A calendar quarter or other period specified by the Secretary of Aging with respect to the payment of rebates under an agreement as provided in section 703.⁴

“Secretary.” The Secretary of Aging of the Commonwealth.

“Single-source drugs.” Legend drug products for which the FDA has not approved an Abbreviated New Drug Application (ANDA).

“Unit.” A drug unit in the lowest identifiable amount, such as tablet or capsule for solid dosage forms, milliliter for liquid forms and gram for ointments or creams. The manufacturer shall specify the unit for each dosage form and strength of each covered prescription drug in accordance with the instructions developed by the Health Care Financing Administration for purposes of the Federal Medicaid Rebate Program under section 1927 of Title XIX of the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.).

“Wholesaler.” Any person, partnership, corporation, institution or entity to which the manufacturer sells the covered prescription drug, including a pharmacy or chain of pharmacies, but that does not relabel or repackage the covered prescription drug.