Drug Rebates

All drugs on the Texas Medicaid Formulary must be made by a drug manufacturer participating in the CMS Drug Rebate Program to receive federal funds for out-patient prescription claims, In return for having their drugs covered by state Medicaid programs, the manufacturer agrees to pay rebates according to their state and federal contracts.

Medicaid Drug Rebate Program

The Medicaid Drug Rebate Program requires drug manufacturers to sign a rebate contract with the Center for Medicare and Medicaid Services (CMS).  Manufacturers must pay rebates to the states based on the number of units of their product paid, and the states, in turn, must cover the drug manufacturers' products.  The drug rebates apply to drugs supplied to people enrolled in either traditional Medicaid or Medicaid managed care either through a contracted pharmacy or administered by a contracted physician/clinician.

Supplemental Medicaid Drug Rebate Program

The Supplemental Drug Rebate Program works in conjunction with the Texas Medicaid Preferred Drug List (PDL).  For a manufacturer's product to be included on the PDL, a manufacturer agrees to pay an additional, supplemental rebate amount on their products.  Providers prescribing a product in a reviewed class, but not selected as the preferred drug, are required to obtain prior authorization for the non-preferred product.

CHIP Drug Rebate Program

Manufacturers complete and sign the CHIP Drug Rebate Agreement and return two originals to the appropriate rebate administration contact to participate in the CHIP Drug Rebate Program.

CSHCN and KHC Drug Rebate Programs

The Kidney Health Care program provides wrap-around Part D coverage for eligible people. CMS has classified this program as a State Pharmaceutical Assistance Plan (SPAP).

Manufacturers complete and return two original copies of the appropriate rebate administration contact to participate in either the CSHCN or KHC drug rebate program.