Federal Upper Limits on Drugs
In 1987, regulations limited the amount which Medicaid could reimburse for drugs with available generic drugs under the federal upper limit program. These limits are intended to assure that the Federal government acts as a prudent buyer of drugs. The concept of the upper limits program is to achieve savings by taking advantage of the current market prices.
Until the passage of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90), the Federal Upper Limit (FUL) could be established only if all versions of a drug product had been classified as therapeutically equivalent (A-rate) by the FDA in its publication "Approved Drug Products with Therapeutic Equivalence Evaluations" and at least three suppliers were listed in the current editions of published national compendia. OBRA '90 expanded that criteria and permitted the establishment of a FUL for a drug product if there are three (or more) versions of the product rated therapeutically equivalent (A-rated) regardless of the ratings of other versions (B-rated) and at least three suppliers are listed in the current editions of published national compendia.
The Federal Upper Limit drug listing is published in the State Medicaid Manual, Part 6, Payment for Services, Addendum A
- Transmittal No. 37 Dated November 20, 2001 - Federal Upper Limit Drugs in portable document format (PDF - 218KB).
- Changes made to Transmittal No. 37 - (PDF - 99KB)
- Transmittal No. 36 Dated April 2000 - Federal Upper Limit Drugs in portable document format (PDF - 176KB).
- Changes made to Transmittal No. 36
- View the State Medicaid Manual, Part
6, (PDF 167KB) Payment for Services.
DISCLAIMER: The revision date and transmittal number only apply to the redlined material. All other material was previously published in the manual and is only being reprinted.
Contacts:
Cindy Pelter, E-mail cpelter@cms.hhs.gov
Claire Hardwick, E-mail chardwick@cms.hhs.gov
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