Dear Manufacturer Technical and Invoice Contacts,
This is a follow-up to the April 8, 2022 email reminder to manufacturers regarding preparation for the upcoming 2021 Branded Prescription Drug (BPD) Fee Year.
Reporting of State Drug Utilization Data for Branded Drug Fee Calculation
In accordance with Section 1927(b)(2)(A) of the Social Security Act (the Act), States are required to submit drug rebate utilization data to CMS within 60 days of the end of each quarter. Consistent with the Branded Prescription Drug program in the Affordable Care Act, State Drug Utilization Data (SDUD) continue to be used as part of the methodology for calculating an annual fee on branded prescription drug manufacturers and importers. In general, the government drug programs specified in section 9008 (e.g., Medicaid, Medicare Part B and Medicare Part D, Department of Veteran Affairs (VA), the Department of Defense (DOD) and TRICARE) are required to report drug sales information to the Department of Treasury each year so that the fees can be accurately calculated. As a result, the accuracy of the SDUD is essential to ensuring that Medicaid’s drug sales information is reported correctly to the Department of Treasury.
Importance of Submitting Correct Data
Manufacturers are encouraged to review utilization data in MDP to ensure that state utilization data reported to CMS are accurate as compared to the state rebate invoices received by manufacturers (Note: The Medicaid state utilization data reported to CMS and posted in MDP does not reflect State-only and/or State Pharmacy Assistance Program units; therefore, please do not consider these types of units when performing your review). When preparing quarterly invoices, there may have been some differences in the unit standards used by the MDRP compared to those used by pharmacies. In those instances where the reimbursement unit standard used by pharmacies may be different from the rebate unit standard, appropriate conversion factors may be necessary prior to invoicing labelers. We have noticed that some manufacturers are repeatedly neglecting to apply the necessary conversion factors from quarter to quarter, often resulting in grossly overstated or understated rebate amounts, creating similar types of BPD disputes across numerous states. A unit conversion file (created and maintained by North Dakota) is posted to our Dispute Resolution Program (DRP) Medicaid.gov page, under DRP Resources: https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/medicaid-drug-rebate-program-dispute-resolution/index.html).
Manufacturers need to correct existing issues from previous years so the same BPD disputes are not submitted each year. It is imperative that states and manufacturers work together to correct these data inconsistencies. The next annual fee calculation will use the data submitted by states for all quarters in 2021. If there are differences between quarterly rebate invoices and the state-reported utilization data in MDP for the same quarter in 2021, we request that a manufacturer contact the appropriate state’s Technical Contact (copying CMS at MedicaidBPD@cms.hhs.gov) regarding the difference. A list of state Technical Contacts can be found at https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html. If a discrepancy is found, states can resubmit utilization data with corrected units to CMS, leveraging the file upload functionality in the MDP system. In addition to such utilization adjustments, states are also required to update utilization based on agreed-upon rebate dispute resolutions and conversion adjustments. If a manufacturer has reached agreement on an adjustment and/or dispute with a state and that agreement isn’t reflected in MDP by the due date of the next quarterly data transmission from the state, the manufacturer should contact the state to confirm that the adjusted data has been reported to CMS.
Since the CMS State Drug Utilization Data File is being used, in part, to determine the branded prescription drug fee, if the data are understated or overstated, then the fee could also be understated or overstated. CMS encourages manufacturers to contact states, giving priority to significant disparities in utilization to help ensure accuracy in the calculation of the annual fee. For additional information, please refer to Manufacturer Release No’s 89 & 92 located on Medicaid.gov at https://www.medicaid.gov/medicaid/prescription-drugs/program-releases/index.html or the BPD webpage at: https://www.medicaid.gov/medicaid/prescription-drugs/branded-prescription-drug-fee-program/index.html.
Note: We have sent this information to the Manufacturers’ Technical and Invoice Contacts for the Medicaid Drug Rebate Program (MDRP). If you are not your company’s contact for the branded prescription drug fee (BPD) program, please forward to your company’s BPD contact, and be aware that they may need your assistance using/interpreting the rebate data being used for the annual sales fee to more effectively evaluate whether disputes are warranted, and how to present the data in such instances.
We appreciate the efforts put forward by the majority of our manufacturer stakeholders to ensure the accuracy of the data reported and in communicating with states and CMS to prevent disputes. If you have any questions, please feel free to contact us via this email resource box, MedicaidBPD@cms.hhs.gov.
CMS Medicaid BPD Team