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Pharma Manufacturers Must Take Action: CMS Releases First Revised Version of the Medicaid Drug Rebate Program National Rebate Agreement Since 1991

The Centers for Medicare & Medicaid Services (CMS) published a final notice in the Federal Register on March 23, 2018, to amend and update for the first time since its original release in 1991 the Medicaid National Drug Rebate Agreement (NDRA). The updates incorporate legislative and regulatory changes that have been promulgated in the intervening years, such as the release of the Final AMP Rule in January 2016. Additionally, the Center for Medicaid and CHIP Services issued Release Number 108 on March 26, 2018, detailing exactly what actions participating drug manufacturers must take in light of the new agreement.  

Of most immediate importance, drug manufacturers who are currently party to an existing NDRA have until September 30, 2018, to “complete (including the CMS-367d), sign, and submit” the updated NDRA. Physical hard copies of the signed NDRAs no longer must be mailed to the agency; instead, a signed copy should be returned to CMS at drugrebateagreement@cms.hhs.gov, and CMS will send a fully executed copy of the agreement back to the manufacturer once the NDRA has been accepted. Manufacturers who do not execute the new NDRA within the specified time frame are being put on “notice of good cause to terminate their existing rebate agreement(s) on October 1, 2018.” The Release also reminds manufacturers that a new NDRA must be submitted for each of the manufacturer’s labeler codes.  

The Federal Register notice contains the text of the newly revised NDRA, and addresses industry comments to the changes made to the document. Arent Fox has prepared a redline analysis illustrating the exact differences between the older 1991 version of the agreement and the new version whose changes are applicable as of March 23, 2018. 

Some of the major changes to the NDRA include:

  • Direct reference to statutory and regulatory citations of major defined terms, rather than recitation of the term’s definition in the body of the agreement;
  • Incorporation by reference of the applicable regulations related to the Medicaid Drug Rebate Program (MDRP);
  • Addition of a new defined term, “State Drug Utilization Data,” which explicitly specifies that state invoices must exclude 340B utilization; 
  • Revisions to the definition of “Unit” to refer to the lowest dispensable amount of a drug;
  • A new requirement that manufacturers identify individual points of contact for legal, invoice, and technical issues;
  • Reference to specific Office of Management and Budget-approved forms to be used when reporting data to CMS and updated language regarding reporting requirements;
  • Updates to the dispute resolution procedures in the event that State Drug Utilization Data is inaccurate or incorrect;
  • New requirements regarding reinstatement of a terminated NDRA; and 
  • The ability of notices to be sent either via email or in writing, as well as a new physical notice addresses applicable to CMS. 

Manufacturers who either currently participate in the Medicaid Drug Rebate Program, or who anticipate participating in the near future, should take notice of these changes to the NDRA and prepare for future compliance accordingly.  

Arent Fox's Health Care group regularly tracks and analyzes regulatory and agency guidance related to the MDRP. For more information regarding the MDRP, the new version of the NDRA, or any other topic related to how drug manufacturers interact with Federal health care programs, please contact Stephanie Trunk, Erin Atkins, or Emily Leongini in our Washington, DC office or the Arent Fox attorney who regularly handles your matters.