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Table 1 Types of rebates available to state Medicaid programs under the Medicaid Drug Rebate Program

From: How do state Medicaid programs determine what substance use disorder treatment medications need prior authorization? An overview for clinicians

Rebate type Entity collecting the rebate Brand versus generic Methodology
Federal rebate, also known as mandatory or statutory rebate State Medicaid program Brand Base rebate, the greater of:
 23.1% of the average manufacturer price, or
 Average manufacturer price minus “best price”a
Plus the inflationary rebate, if applicable:
 Difference between the increase in average manufacturer price and the increase in Consumer Price Index Urban value
Generic Base rebate:
 13% of the average manufacturer price
Plus the inflationary rebate, if applicable:
 Difference between the increase in average manufacturer price and the increase in Consumer Price Index Urban value
Supplemental rebate State Medicaid program or Medicaid managed care plans, varies by state Brand only Methodology is proprietary and confidential
Rebates are typically provided in exchange for a preferred position on the preferred drug list
  1. a“Best price” refers to the best price a manufacturer has given to most other payers, with some limited exceptions for certain federal health care programs