MDRP and the U.S. territories: Manufacturer rebate obligations, but no mandatory coverage, in case of a section 1115 waiver?

In the ACA Final Rule, the Centers for Medicare & Medicaid Service (CMS) expanded the definition of the terms “States” and “United States” for purposes of the Medicaid Drug Rebate Program (MDRP) to encompass the U.S. territories.

Unless the effective date of this change is revised, as of April 1, 2020, manufacturers will be required to include transactions in the territories in their AMP and BP calculations, and will be responsible for the payment of Medicaid rebates on Medicaid utilization in the U.S. territories. CMS in the final rule also indicated that certain territories could request a section 1115 waiver if they do not wish to participate in the MDRP—which raises the concern that, if granted, such a waiver could mean that the territory’s Medicaid program is not required to cover participating manufacturers’ covered outpatient drugs, but that manufacturers may still be required to pay the Medicaid rebate.

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