January 26, 2022

Volume XII, Number 26

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Medicaid Drug Rebate Agreements: Changes Require Immediate Action By Pharmaceutical Manufacturers

For the first time since the enactment of the Medicaid Drug Rebate Program (MDRP), the Centers for Medicare and Medicaid Services (CMS) revised the National Medicaid Drug Rebate Agreement (NDRA) entered into between drug manufacturers and the U.S. Department of Health and Human Services (HHS).

Published in the Federal Register (83 Fed. Reg. 12770 (Mar. 23, 2018)), the final revised NDRA contains several noteworthy changes from the version currently in effect including:

  • Incorporating the statutory and/or regulatory definitions for defined terms in the NDRA.This is intended to ensure that the NDRA remains consistent with the statutory and regulatory framework governing the MDRP.
  • Imposing new reporting obligations on drug manufacturers. Among other things, the revised NDRA requires manufacturers to calculate and report the Unit Rebate Amount (URA) for their drug products, where previously CMS performed those calculations. In response to public comments, CMS explained that this added language is intended to “strengthen[]” CMS’s existing position that drug manufacturers are responsible for making URA calculations.
  • Expanding the HHS Secretary’s audit authority to encompass all pricing data submitted. Pursuant to section 1927(b)(3)(A) of the Social Security Act; in the original version, the Secretary’s audit authority is limited to Average Manufacturer Price and Best Price.
  • Revising penalties provisions. In its penalties provisions, the revised NDRA now expressly provides that it does not limit the remedies available to the United States for a violation of the NDRA or any other law.

The MDRP is a complex system, involving the analysis and application of interrelated federal and state laws. The revisions listed above are not an exhaustive list of the changes found in the new NDRA.  Manufacturers wishing to continue their participation in the MDRP now have six months to assess these changes and how they impact their operations and policies and to submit a new NDRA.

© 2022 Foley & Lardner LLPNational Law Review, Volume VIII, Number 94
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About this Author

Katy E. Koski, Foley Lardner, Life Sciences Lawyer, Products Distributors Attorney,
Partner

Katy E. Koski is a partner and litigation lawyer with Foley & Lardner LLP. She is an experienced trial lawyer with particular experience defending pharmaceutical and other life science companies in large, multi-jurisdictional government investigations and litigations. Ms. Koski also has represented clients on matters involving product liability claims in a variety of industries, including drug and medical companies, product distributors, and aircraft manufacturers.

617-502-3242
Andrew Yost Business Litigation Lawyer Foley
Attorney

Andrew C. Yost is an associate and litigation attorney with Foley & Lardner LLP. He is a member of the firm’s Business Litigation & Dispute Resolution Practice.

In 2014, Mr. Yost worked as a summer associate assisting Foley’s business litigation attorneys. While in law school, Mr. Yost served as a judicial intern for the Honorable Jeffrey R. Howard of the U.S. Court of Appeals for the First Circuit. In addition, Mr. Yost gained valuable experience as a student in Cornell Law School’s Global Gender Justice Clinic and Cornell Law School’s...

617-502-3351
James W. Matthews, Foley Lardner, Wholesale Products Litigation lawyer, Drug manufacturing Attorney
Partner

James W. Matthews is a partner and litigation lawyer with Foley & Lardner LLP. He focuses his practice on trying complex business disputes for a variety of businesses, including manufacturers of pharmaceutical products and medical devices. Mr. Matthews has experience as lead counsel to one of the world’s largest generic drug manufacturers in the nationwide Average Wholesale Price litigation. He coordinated the defense of more than 50 separate lawsuits pending in state and federal courts around the country, including a qui tam action under the Federal False Claims Act...

617-502-3298
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