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States With Separate Children's Health Insurance Programs Could Have Collected an Estimated $641 Million Annually If States Were Required To Obtain Rebates Through the Medicaid Drug Rebate Program

Purpose of This Data Brief

Under current Federal requirements for the Medicaid Drug Rebate Program (MDRP), States must obtain drug rebates for Medicaid-covered outpatient prescription drugs that are provided through Medicaid or an expansion of its Medicaid program (Medicaid expansion). However, for separate Children's Health Insurance Program (CHIP) drugs, those Federal Medicaid drug rebate requirements do not apply.

As of the preparation of this Data Brief, 40 States operate separate CHIPs, whether in combination with Medicaid expansion or on a stand-alone basis. Separate CHIP is a program under which a State receives Federal funding to provide child health assistance to uninsured, low-income children and which meets the requirements of section 2103 of the Social Security Act.

Our objective was to identify the total drug rebates that States could have collected under their separate CHIPs if States had been required to obtain those rebates through the MDRP.

We used the State agencies' responses to a survey we sent to them, to estimate the total rebates that States could have collected if the MDRP's rebate requirements were to be extended to all States that operated separate CHIPs.

Results of Analysis

If Federal law were to require States to obtain rebates under the MDRP for separate CHIP drugs, the 40 States that operated separate CHIPs could, according to our estimates, have invoiced, collected, and directly received $641.2 million from the drug manufacturers for calendar year 2020. These estimated rebates totaled $125.5 million for the States and $515.7 million for the Federal Government.

Because this Data Brief contains no recommendations, CMS did not provide written comments on our draft Data Brief but did furnish technical comments, which we addressed as appropriate.

Filed under: Centers for Medicare and Medicaid Services