The Centers for Medicare & Medicaid Services (CMS) Medicaid Drug Programs (MDP) system performs the Unit Rebate Amount (URA) Calculation using the drug manufacturer's pricing. The specific methodology used is determined by statute, and depends upon whether a drug is classified as:
- Single source ("S" drug category) or Innovator multiple source ("I" drug category)
- “S” or “I” Line Extension Drug
- Non-innovator multiple source ("N" drug category)
- Clotting Factor drug (CF)
- Exclusively Pediatric drug (EP)
CMS provides this URA information to states as a courtesy; however, drug manufacturers remain responsible for correctly calculating the URA for their covered outpatient drugs.
Statutory Formulas: Rebate Amount Calculation per Unit of Drug
Innovator Drugs – the greater of 23.1% of the Average Manufacturer Price (AMP) per unit or the difference between the AMP and the best price per unit and adjusted by the Consumer Price Index-Urban (CPI-U) based on market date and current quarter AMP.
Blood Clotting Factors – the greater of 17.1% of the AMP per unit or the difference between the AMP and the best price per unit and adjusted by the CPI-U based on market date and current quarter AMP.
Exclusively Pediatric Drugs Approved by the U.S. Food and Drug Administration (FDA) – the greater of 17.1% of the AMP per unit or the difference between the AMP and the best price per unit and adjusted by the CPI-U based on market date and current quarter AMP.
Line Extensions – For a drug that is a new formulation (line extension) of a brand name drug that is an oral solid dosage form, the rebate is the amount computed under section 1927 of the Act or, if greater, the basic URA plus the product of:
- The AMP for the line extension drug
- The highest additional rebate for any strength of the original brand name drug
- The total number of units of each dosage form and strength of the line extension drug
- Line Extension Frequently Asked Questions (FAQ)
- This Manufacturer Release provides FAQs regarding line extension drugs. This FAQ is designed to provide additional information and clarity regarding line extensions, the Medicaid Drug Program (MDP) system, reporting requirements, and dates.
"N" Drug URA Calculation
For "N" drugs, the URA is determined through four steps or calculations:
- The first calculation provides the basic URA
- The second provides the additional URA
- The third adds the basic URA and the additional URA together to determine the total URA
- The fourth compares the total URA and the quarterly AMP to determine whether the total URA exceeds the quarterly AMP
"S" or "I" Drug URA Calculation
For "S" or "I" drugs, the URA is determined through four steps or calculations:
- The first calculation provides the basic URA
- The second provides the additional URA
- The third adds the basic URA and the additional URA together to determine the total URA
- The fourth compares the total URA and the quarterly AMP to determine whether the total URA exceeds the quarterly AMP
"S" or "I" Line Extension Drug URA Calculation
For line extension drugs the URA is determined through three steps or calculations:
- The first calculation provides the Standard URA
- The second provides the Alternative URA
- The third compares the Standard URA and the Alternative URA to determine the total URA
- The fourth compares the total URA and the quarterly AMP to determine whether the total URA exceeds the quarterly AMP
Download the URA calculation example for line extension "S" or "I" drugs.
Clotting Factor
Clotting Factor (CF) designation allows for a minimum rebate percentage of 17.1 percent of Average Manufacturer Price (AMP) for single source and innovator multiple source drugs. Manufacturers are required to submit a request to CMS for each National Drug Code (NDC) they believe should be identified as clotting factor. CMS has compiled a list of all the NDCs that have been reviewed and approved to be identified with the CF designation. For the purposes of determining whether an NDC is a CF, and potentially subject to a lower rebate, states are encouraged to refer to this list for developing appropriate utilization reviews. Please note that this list only includes NDCs which manufacturers have submitted to CMS for review. The link below will take you to the CF spreadsheet which will be updated quarterly.
Additionally, CMS has developed a pricing comparison table which illustrates the relationship of the average acquisition cost (AAC) to published pricing benchmarks commonly used by state Medicaid agencies and the Medicare program for determining ingredient cost for reimbursement of blood disorder products. This table can be found on the Pharmacy Pricing Page.
Exclusively Pediatric Drugs
Exclusively Pediatric (EP) designation allows for a minimum rebate percentage of 17.1 percent of Average Manufacturer Price (AMP) for single source and innovator multiple source drugs. Manufacturers are required to submit a request to CMS for each National Drug Code (NDC) they believe should be identified with an EP designation. CMS has compiled a list of all the NDCs that have been reviewed and approved to be identified with the EP designation. For the purposes of determining whether an NDC is EP, and potentially a lower rebate, states are encouraged to refer to this list for developing appropriate utilization reviews. Please note that this list only includes NDCs which manufacturers have submitted to CMS for review for an EP. The link below will take you to the EP spreadsheet which will be updated quarterly.
Exclusively Pediatric Drugs Report
For additional information, please contact rxdrugpolicy@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 Unit Rebate Amount and Calculations 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 April 04, 2024