6. Rebate Programs

5.1 Supplemental Rebate Program

Texas Medicaid created the Supplemental Drug Rebate Program in conjunction with the Preferred Drug List (PDL). The PDL is a list of medications recommended by the Texas Drug Utilization Review (DUR) Board and approved by the HHSC Executive Commissioner. The DUR Board considers the drug’s efficaciousness, clinical significance, cost-effectiveness, and safety when making recommendations to add drugs to the PDL. The PDL is published in January and July of each year. Medications designated as non-preferred on the PDL require prescribing providers to obtain prior authorization.

5.1.1  Application and Approval Process

The DUR Board meets quarterly to develop criteria and standards impacting Texas Medicaid, including:

  • Developing and submitting recommendations to the PDL
  • Suggesting clinical prior authorizations on outpatient prescription drugs
  • Recommending educational interventions for Medicaid providers
  • Reviewing drug utilization across the Medicaid program

The VDP PDL vendor notifies manufacturers of drug classes scheduled for review before each quarterly DUR Board meeting. A solicitation list is created using all the branded products on the drug class list, as well as some generic exceptions, and manufacturers' contact information is obtained from signed supplemental rebate contracts.  

Submit the Manufacturer Contact Form to request an addition to the solicitation

list. The VDP PDL vendor distributes the solicitation list to manufacturers approximately 3 months before each DUR Board meeting. This provides an opportunity for manufacturers to submit a supplemental rebate offer based on a Guaranteed Net Unit Price (GNUP), valid for 12 months. Download the form at txvendordrug.com/resources/downloads.

  • GNUP is equal to the Wholesaler Acquisition Cost (WAC) price per unit minus the Federal Unit Rebate Amount (FURA) minus the Supplemental Unit Rebate Amount (SURA).

Once HHSC makes a final decision on PDL composition, contracts are forwarded to the manufacturers for signature. HHSC signs and executes the completed contracts received from manufacturers.

5.2 CHIP Drug Rebate Program

Complete the CHIP Drug Rebate Agreement (HHS Form 1337) and return two originals to the Texas Contract Manager (see Table 3) to participate in the rebate program. Download the form at txvendordrug.com/resources/downloads.

5.2.1 Program Specific Requirements 

Drug manufacturers must submit quarterly pricing data to HHSC as stated in their signed agreements (see Table 7).

5.3 Healthy Texas Women Program

VDP collaborates with the HTW program to determine which Medicaid drugs are included as part of the HTW and HTW Plus formulary.  VDP undertakes a quarterly formulary review, the results of which are submitted to the HTW Program. The HTW program reviews the list of drugs and submits an approved list to the DUR/FM formulary team for inclusion on the HTW formulary. 

Participation in the rebate programs for Healthy Texas Women varies depending on the budget source used to pay for the original claim or encounter eligible for a rebate.

  1. Claims and encounters for clients under 18 (Rebate Programs called TWHP) are paid with State of Texas General Revenue funding.  Participation in this rebate program is voluntary with some exceptions.
  2. Claims and encounters for postpartum clients (Rebate Programs called HTW+) are paid with State of Texas General Revenue funding.  Participation in this rebate program is voluntary with some exceptions.
  3. Claims and encounters for clients 18 and over (Rebate Programs called HTW) are paid with federal funding and are subject to CMS Federal rebate rules.  Participation in this rebate program is mandated if the manufacturer has signed a National Drug Rebate Agreement with CMS. 

Manufacturers with questions related to program formulary coverage, refer to Table 5 for contact information. 

5.4 Kidney Health Care Program

The KHC Program is mandated by the Legislature to have a rebate agreement with the manufacturer before a drug is added to the formulary

Manufacturers participating in the MDRP as an approved SPAP can exclude prices to SPAPs from their Medicaid Best Price calculations. This allows the State to use the full CMS rebate rate to simplify the paperwork for both the State and the manufacturer. All rebate money collected for KHC drug claims is returned to the program for client services.

Complete the KHC Program Drug Rebate Agreement (HHS Form 1329) and return two originals to the KHC program to participate in the rebate program. 

5.5 CSHCN Services Program

Complete the CSHCN Services Program Drug Rebate Agreement (HHS Form 1343) and return two signed original copies to the CSHCN Services Program (see Table 4) to participate in the rebate program. Download the form at txvendordrug.com/resources/downloads.

5.5.1 Program Specific Requirements

Drug manufacturers must submit quarterly pricing data to HHSC as stated in their signed agreements (see Table 7).