Medicaid Drug Rebate Program
Created by the Omnibus Budget Reconciliation Act (OBRA) of 1990, the
Medicaid Drug Rebate Program requires a drug manufacturer to enter
into and have in effect a national rebate agreement with the Secretary
of the Department of Health and Human Services for States to receive
federal funding for outpatient drugs dispensed to Medicaid patients.
The drug rebate program is administered by CMS's Center for
Medicaid and State Operations (CMSO). The drug rebate program was
amended by the Veterans Health Care Act of 1992. Under VHCA, drug
manufacturers are required to enter a pricing agreement with the
Secretary of Health and Human Services for the Section 340B Drug
Pricing Program, which is administered by the Health Resources and
Services Administration. To obtain a copy of this pricing agreement,
please use this website:
ftp://ftp.hrsa.gov/bphc/pdf/opa/pricingagreement.pdf. In addition,
VHCA requires drug manufacturers to enter into various agreements with
the Department of Veterans Affairs. For more information regarding
Section 603 of the VHCA's requirements, please contact Carole
O'Brien at (708)786-4957 or carole.obrien@med.va.gov. A drug
manufacturer must sign an agreement with these two programs in order
to have its drugs covered by Medicaid.
Approximately 550 pharmaceutical companies currently participate in this program. Forty nine States, (Arizona is excluded), and the District of Columbia cover drugs under the Medicaid Drug Rebate Program.
As of January 1, 1996, the rebate for covered outpatient drugs is as follows:
Innovator Drugs - the larger of 15.1 % of the Average Manufacturer Price (AMP) per unit or the difference between the AMP and the best price per unit and adjusted by the CPI-U based on launch date and current quarter AMP.
Non-innovator Drugs - 11 % of the AMP per unit.
The following information concerning this program is available:
- Memoranda to State Medicaid Directors
- Memoranda to Participating Drug Companies
- Consumer Price Index-Urban (CPI-U) Values
- 91-Day Treasury Bill Rates
- State Drug Utilization Data
- State Contact Information
- Quarterly Medicaid Prescription Reimbursement Information by State
- Drug Product Data
- Drug Company Contact Information
- Interest Calculation for Late Rebate Payments
- Less-Than-Effective (LTE) and Identical, Related & Similar (IRS) Drugs
- Unit Rebate Calculation
- National Drug Rebate Agreement
- Dispute Resolution Program
