Medicaid National Drug Rebate Agreement (NDRA)

Prior to Requesting an NDRA

Before requesting an NDRA, the labeler code should have at least one drug on the market and available for sale. Make a complete list of every NDC (11-digit/package size level), including NDCs on the outer package, as well as those on any inner packages. Each NDC must meet the definition of a Covered Outpatient Drug (COD) as defined in section 1927 of the Social Security Act (the Act) and required by the Medicaid Drug Rebate Program (MDRP). Please note that you are not required to include NDCs that represent samples that will not be sold (e.g., products marked as “sample” and provided to a physician at no charge), or NDCs that are not going to be marketed until a future time and/or for which you do not have a marketing start date. Verify that the drugs are listed (or de-listed if any have been discontinued) with the Food and Drug Administration (FDA) on their Comprehensive NDC SPL Data Elements File (NSDE). To verify the status of drug listings, email the Structured Project Labeling (SPL) Coordinator at the FDA at spl@fda.hhs.gov.

Manufacturers that wish to participate in the MDRP are required to report all their CODs to CMS, regardless of labeler code. Therefore, in an effort to prevent selective reporting of NDCs, manufacturers must ensure that all associated labeler codes with CODs enter into a rebate agreement in order to comply with the terms of the NDRA. When a participating manufacturer requests an agreement for a newly acquired labeler code that has CODs, that NDRA request will be subject to verification of their proposed COD list. For additional information, please refer to Federal Register 83 FR 12770.

Additionally, manufacturers entering into an NDRA must meet the requirements in section 1927(a)(1) of the Act, requiring compliance with sections 1927(a)(5) and 1927(a)(6). Those sections require that a manufacturer enters into an agreement with the Public Health Service that satisfies section 340B of the Public Health Service Act, and, enters into a master agreement with the Secretary of Veterans Affairs.

Manufacturers participating in the MDRP are required to have a Technical, Invoice, and Legal Contact with mailing addresses in the United States (U.S.) or U.S. Territories.  Mailing addresses that are forwarding services outside of the U.S. or U.S. Territories are not permitted. Please note that the final part of the rebate agreement request process will require that official contact information be submitted. If the contact information provided at that time does not comply with this requirement, a final rebate agreement may not be executed.

Requesting an NDRA for a New Labeler Code

New NDRA requests are for labeler codes that have not previously participated in the MDRP. To request an NDRA:

• Review NDRA Reference Guide to prepare your information.
• Review sample file format / .CSV and instructions, and prepare your data accordingly.
• To view the terms of the NDRA, refer to the Federal Register.
• Obtain access to the Medicaid Drug Programs (MDP) system.
• Proceed with requesting an NDRA in the MDP system. Note: A detailed MDP NDRA Guide is located within the MDP application.

NDRA Optional and Mandatory Effective Dates 

The Balanced Budget Refinement Act of 1999 amended section 1927(a)(1) of the Act to give states the option of using a different rebate agreement effective date than the date that was required prior to the amendment.  Specifically, the law permits that a rebate agreement may become effective as of the date on which the agreement is entered into (referred to as the Optional Effective Date (OED)) or, at the State’s option, on any date thereafter on or before the first day of the calendar quarter that begins more than 60 days after the agreement is entered into (referred to as the Mandatory Effective Date (MED)).

Examples of Optional and Mandatory Effective Dates Once the Rebate Agreement Has Been Received and Accepted by CMS

Manufacturer X uploads a signed and completed rebate agreement on January 15th,

• The Optional Effective Date for Manufacturer X's rebate agreement is January 15th.
• The Mandatory Effective Date for Manufacturer X's rebate agreement is the first day of the calendar quarter that begins more than 60 days after the date the agreement is entered into. Sixty days after January 15th is March 16th and the next complete quarter that occurs after that date is the second quarter; therefore, the Mandatory Effective Date for Manufacturer X's rebate agreement is April 1st.

Generally, the last date on which a new manufacturer's rebate agreement can be accepted to establish the mandatory state coverage date each quarter (in a non-leap year) is as follows:

*New NDRA requests must be successfully received in our MDP system at least 5 business days prior to these dates, in order to allow for review and processing of the submitted NDCs.  Note that receipt of a request by these dates is not a guarantee that an agreement will be issued by the next mandatory effective date.  Unresolved issues with manufacturer reported data may delay the issuance of an agreement. Additionally, please be aware that drugs must be on the market and available for sale when requesting an NDRA.

Ensuring NDRA Compliance

Once an NDRA has been officially executed, the manufacturer is responsible for reviewing and adhering to all the NDRA requirements*:

* For a complete outline of all manufacturer NDRA requirements, please refer to the Federal Register, Section II Manufacturer Responsibilities.

NDRA Termination

There are two types of NDRA terminations, Termination for Cause and Voluntary Termination. In accordance with the statute, termination (whether ‘for Cause’ or ‘Voluntary’) shall not affect rebates due under the agreement before the effective date of the termination. Invoicing by states may continue for up to four quarters beyond the manufacturer’s termination from the program for all utilization occurring until the date of termination. State Medicaid agencies are also notified of any termination action.

Additionally, please note that the termination of an NDRA may impact the reimbursement of products under the Medicare Part B Program.

Termination for Cause

In accordance with section 1927(b)(4)(B)(i) of the Social Security Act (the Act) and section VII. (b) of the NDRA, labelers may be terminated for violation(s) of section 1927 of the Act and its implementing regulations, the terms of the NDRA, and/or other good cause, as described below.

• False Reporting or Misreporting of Pricing and Drug Product Data
• Non-Reporting/Late Reporting Pricing and Drug Product Data
• Not Reporting All Covered Outpatient Drugs (CODs)
• Failure to Notify CMS of Any Filing of Bankruptcy Within Seven Days of the Filing Date
• Non-Payment of Rebates to States
• Discrepancy in Labeler Rebate Agreement Information Reported
• Failure to Enter into the Required 340B and VA Agreements
• Labeler Code Has No Active Products

Please note that CMS reserves the right to identify additional violation(s) of applicable statutes, regulations, or the NDRA and /or any other good cause reasons for termination, which may also lead to termination.

Labelers identified as being out of compliance will receive a Warning Email listing their specific violations 90 days prior to the termination effective date. If those violations are not remediated, a Termination Letter will be sent 60 days prior to the termination effective date. Termination may be avoided if all violations are remediated 35 days prior to the termination effective date, and CMS has been notified that you have done so via email at MDRPCompliance@cms.hhs.gov. CMS will evaluate the data submitted to determine if the labeler has come into compliance with all applicable federal laws and regulations and the terms of the NDRA, and will notify the labeler via email if their termination has been successfully remediated.

Voluntary Termination

In accordance with section 1927(b)(4)(B) of the Social Security Act and section VII(b) of the NDRA, the manufacturer may terminate the agreement for any reason and any such termination shall not be effective until the calendar quarter which begins at least 60 days after the date of notice to CMS.

Requests for voluntary termination should be sent via email to DrugRebateAgreement@cms.hhs.gov.

Requesting an NDRA Reinstatement for a Terminated Labeler Code

NDRA Reinstatement requests are for terminated labeler codes that have previously participated in the MDRP.  To request a reinstatement, please refer to the Reinstatement section of the NDRA Reference Guide.

If you have any questions, please contact DrugRebateAgreement@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 National Drug Rebate Agreement (NDRA) 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 December 29, 2022