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Medicaid Drug Rebate Program

The Medicaid Drug Rebate Program (MDRP) is a program that includes Centers for Medicare & Medicaid Services (CMS), state Medicaid agencies, and participating drug manufacturers that helps to offset the Federal and state costs of most outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 drug manufacturers currently participate in this program. All fifty states and the District of Columbia cover prescription drugs under the MDRP, which is authorized by Section 1927 of the Social Security Act.

The 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 (HHS) in exchange for state Medicaid coverage of most of the manufacturer’s drugs. When a manufacturer markets a new covered outpatient drug, it must also submit product and pricing data concerning the drug to CMS via the Drug Data Reporting for Medicaid (DDR) system. This ensures that states are aware of the newly marketed drug. In addition, Section II(g) of the Rebate Agreement explains that manufacturers are responsible for notifying states of a new drug’s coverage. Manufacturers are required to report all covered outpatient drugs under their labeler code to the MDRP. Manufacturers may not be selective in reporting their National Drug Code's (NDC) to the program. Manufacturers are then responsible for paying a rebate on those drugs for which payment was made under the state plan. These rebates are paid by drug manufacturers on a quarterly basis to states and are shared between the states and the Federal government to offset the overall cost of prescription drugs under the Medicaid Program.

In addition to signing a national rebate agreement, drug manufacturers are required to enter into agreements with two other Federal programs in order to have their drugs covered under Medicaid: a pricing agreement for the Section 340B Drug Pricing Program, administered by the Health Resources and Services Administration, and a master agreement with the Secretary of Veterans Affairs for the Federal Supply Schedule.

Please note that in accordance with section 1927(a), in order for payment to be made available under Medicare Part B for a manufacturer’s covered outpatient drugs as defined at section 1927(k)(2), the manufacturer must enter into a rebate agreement.

Contact Information

The Drug Manufacturer Contact Information contains Optional Effective Date, Termination Date (if applicable), and Legal, Invoice and Technical Contact information for each drug company participating in the MDRP. A record layout for the drug manufacturer contact information is provided in the Drug Manufacturer contact information record layout (PDF, 23.48 KB).

A drug manufacturer should use the Manufacturer Contact Change Form (PDF, 199.1 KB) (CMS 367(d)) to make any changes to its legal, invoice, and/or technical contact information. The drug manufacturer should submit its completed 367d form to the Medicaid Drug Rebate Operations staff via fax (410) 786-0390 or email DDR@cms.hhs.gov. Note: Request for "Labeler Name" name change should be filed with the FDA before they are submitted to CMS **.

The state contact information contains each state's policy, rebate and technical contact information for the MDRP.  

A state should use the State Contact Change Form (PDF, 125.38 KB) (CMS 368) to make any changes to its Policy, Rebate and/or Technical contact information. The state should submit its completed 368 form to the Medicaid Drug Rebate Operations staff via fax (410) 786-0390 or email DDR@cms.hhs.gov.

**It is our understanding that the FDA no longer accepts Form 2656 for labeler name changes; rather, such changes are now handled through electronic submission with the FDA. After a labeler has electronically filed a name change with the FDA, it should then submit a 367d form to CMS’ Medicaid Drug Rebate program (via fax or email, as described above reflecting the new labeler name, as well as any changes to the Legal, Invoice, or Technical Contact information (e.g., edits to any contact name, email address, mailing address, fax #, etc.).

Questions on the Medicaid Drug Rebate Program? Email MDROperations@cms.hhs.gov.

Disclaimer: Please note that the information provided on this web page does not bind or obligate the Centers for Medicare and Medicaid Services (CMS).  The statements included on this web page are intended to provide information on the Medicaid Drug Rebate Program and do not in any way revise or modify the requirements set forth in Section 1927 of the Act, the national drug rebate agreement (NDRA), subsequent program releases, or regulations.

Page last updated on January 22, 2021