Last week, I had the opportunity to attend a few sessions at the Medicaid Drug Rebate Program (MDRP) Summit. This experience reminded me that there is still a genuine desire for collaboration between stakeholder groups. It also reinforced the fact that we continue to face fundamental gaps in how the program is administered.
At one roundtable, two themes stood out to me:
- Manufacturers are using a blueprint built on questionable assumptions to identify potential Medicaid duplicate discounts and dispute rebates.
- There is a desire to collaborate across stakeholders to validate compliance and resolve disputes, but the infrastructure to do so is lacking.
Medicaid and the 340B program often overlap, which creates a risk of what’s called a duplicate discount. Under federal law, drug manufacturers must provide a discount to safety-net providers through 340B or pay a rebate to Medicaid for that same drug — but never both. A duplicate discount happens if a Medicaid claim is fulfilled with a 340B-purchased drug, and the state also requests a rebate from the manufacturer for that same prescription.
To prevent this, states and providers use different mechanisms to signal whether a claim was filed with a 340B drug. Some states rely on the Medicaid Exclusion File (MEF), where providers declare whether they “carve in” or “carve out” Medicaid prescriptions and orders from 340B. Others require claim-level identifiers on each claim.
One of the most telling discussions was how manufacturers and states are approaching rebate disputes. I learned that the primary means many manufacturers use to dispute Medicaid rebates assumes that the MEF is the definitive source of truth for identifying 340B transactions. While about a dozen states rely on MEF, most states now require claim-level identifiers.
HRSA originally designed the MEF for Medicaid fee-for-service (FFS), not managed care [3]. That distinction matters. Carve-in/carve-out decisions at the managed care level are not consistently reflected in the MEF, creating a gap between how the data is used and how care is actually delivered.
Relying on the MEF is like using a metal detector that can’t tell the difference between a gold ring and a bottle cap. It may catch real issues, but it also signals “duplicate” on claims that aren’t problematic. The result is an inflated number of disputes, full of false positives, that make the scope of the problem look much larger than it really is.
I can’t ignore the recent example of Bausch terminating its Medicaid participation to exit the 340B program. This approach may sidestep complexity for the manufacturer, but the impact on patients is real and significant.
At the end of the day, 340B exists to support patient care. If the system is so dysfunctional that walking away feels like the only option, that’s not success — it’s policy failure.
I don’t expect states to standardize their approaches to duplicate discounts anytime soon. And even if they did, it wouldn’t fully solve the problem.
Right now, the narrative is dominated by allegations of “abuse on the provider side.” But maybe the real issue isn’t abuse at all. Maybe it’s a lack of understanding — or worse, the inaccurate use of data .
Manufacturers don’t have visibility into covered entity operations or claims-level data. Covered entities lack consistent ways to communicate back. This is why we need a standardized process to share and compare information. Without it, both sides remain frustrated, and patients lose.
Dispelling a Common Myth: WAC Minus 340B Price ≠ Profit: Another critical theme from MDRP was a recurring misconception: the idea that the financial benefit of 340B is simply the difference between WAC and 340B price. On paper, the savings look large, but that’s not the reality for covered entities. In fact, when prescriptions cannot be filled using 340B drugs, providers often incur substantial losses because reimbursement frequently falls below the WAC cost.
- Example 1 – A widely used Infusion Drug for Autoimmune Disorders: Purchased at ~$145 per vial under 340B vs. $720 WAC. On paper, that’s a $575 “benefit.” But CMS reimbursement (Q3 2025) is ~$197 . After acquisition cost, the benefit is closer to $50 per vial or a loss per vial of just under $500 if not 340B, and average doses require 3–7 vials.
- Example 2 – Oral Oncology Therapy: A once-daily pill for leukemia and rare tumors costs ~$130 WAC per month, but $80 under 340B. Medicaid reimbursement in NYS is $91 . With 340B, entities break even plus a small dispensing fee. Without 340B, they lose ~$40 per prescription.
This nuance is missing in most conversations — and until it’s understood, policy fixes will remain misguided.
Last Sunday afternoon, I sat in a room with manufacturers, state Medicaid agencies, their vendors, and covered entities. Despite different perspectives, we agreed on one thing: we must work together at the local level to review and resolve disputes.
There was a shared sense of duty in the room — to re-establish communication, to listen to each other’s pain points, and to collaborate in good faith for the common goal of caring for patients.
My plea to fellow covered entities: let’s stay open to engagement with manufacturers and be responsive, where we reasonably can, to good faith inquiries. Yes, the environment has grown contentious, and it often feels like we are on the defensive. But even small steps toward dialogue can help.
We must find a way to work together — not for operational ease, but because the 340B program is a lifeline for safety-net providers and the communities they serve nationwide. It deserves our collective commitment to strengthening, not weakening, the foundation of patient care it was built to support.
References
- HRSA: Duplicate Discounts Guidance
- HRSA: Medicaid Exclusion File Overview
- HRSA: FAQs on Medicaid Exclusion File
- Coverage of Bausch Health Medicaid Termination – News Article
- PhRMA Statement on Duplicate Discounts –
- CMS ASP Drug Pricing Files – Q3 2025
- NYS Medicaid Pharmacy Reimbursement
