Medicaid Drug Rebate Program (MDRP)
Definition
The Medicaid Drug Rebate Program (MDRP) is a federal program established under Section 1927 of the Social Security Act that requires drug manufacturers to enter into rebate agreements with HHS as a condition of having their drugs covered by Medicaid. Under the MDRP, manufacturers pay quarterly rebates to state Medicaid programs based on the URA formula.
The MDRP is directly linked to the 340B program: manufacturers who participate in the MDRP must also offer 340B pricing to covered entities under the Pharmaceutical Pricing Agreement (PPA). This is why the scope of the 340B program is defined in terms of covered outpatient drugs under the MDRP—if a manufacturer participates in Medicaid, its covered outpatient drugs must also be offered at 340B prices.
The MDRP also creates the duplicate discount prohibition: covered entities cannot receive both a 340B discount and a Medicaid rebate on the same drug transaction, because that would result in the manufacturer providing two separate discounts on the same unit.
Frequently Asked Questions
Why Medicaid Drug Rebate Program (MDRP) Matters
The MDRP is the legal foundation that connects Medicaid participation to 340B pricing obligations. Understanding this connection helps covered entities understand why 340B pricing is available on the drugs it covers and why duplicate discount prevention is so important.
How Virtue 340B Uses It
Virtue 340B references the MDRP when explaining the legal framework of the 340B program and the basis for duplicate discount prevention obligations.