New Medicaid Rebate Agreement

Merle M. DeLancey Jr.

On March 23, 2018, the Centers for Medicare & Medicaid Services (“CMS”) announced the introduction of a new Medicaid National Drug Rebate Agreement. The new Agreement incorporates legislative and regulatory changes, including, for example, the Affordable Care Act, which have occurred since the original Agreement was published in 1991.

Manufacturers currently participating in the Medicaid Program have until October 1, 2018, to sign the new Agreement. Failure to enter into a new Agreement by October 1, will result in termination of a manufacturer’s existing Agreement.

While the new Agreement does not contain significant changes from the existing Agreement, several changes are worth noting and repeating:

  • Manufacturers must calculate and report pricing data for all covered outpatient drugs for all labeler codes of a manufacturer. In other words, a manufacturer cannot pick and choose for which drugs it will report pricing data.
  • Although CMS may calculate the unit rebate amount (“URA”) for a covered drug based upon manufacturer reported pricing and provide the URA to the States, manufacturers are still required to calculate the URA.
  • Manufacturers are permitted to identify one main contact (a total of three contacts) for Legal, Invoice, and Technical issues. These contacts must have an address in the United States.
  • CMS uses drug information (i.e., Marketing Category and Drug Type) listed with the Food and Drug Administration (“FDA”) to verify that a National Drug Code (“NDC”) meets the definition of a covered outpatient drug. Manufacturers must electronically list their NDCs with the FDA in order to be able to certify their product data in the Medicaid Drug Data Reporting System (“DDR”).
  • Manufacturers on the Inspector General’s Exclusion List will be immediately terminated from the Medicaid Program.

Remember, in order for outpatient drugs to be covered under Medicaid and Medicare Part B, a drug manufacturer must enter into a National Drug Rebate Agreement. So put a reminder in your calendar 30 days prior to October 1, 2018 to make sure your company has entered into a new Agreement.