DEPARTMENT OF HEALTH &amp; HUMAN SERVICES 
 
Health Care Financing Administration 
 
Center for Medicaid and State Operations 
 
7500 Security Boulevard 
 
Baltimore, MD 21244-1850 
 
March 30, 2001 
 
SMDL# 01-018 
 
Dear State Medicaid Directors: 
 
This letter is to inform you that HCFA has received a rebate agreement from 
Danco Laboratories for participation in the Medicaid drug rebate program for 
Mifepristone (Mifeprex or RU-486). Under Federal law, States that choose to 
include outpatient drugs within their programs must cover, with a few limited 
statutory exceptions, Food and Drug Administration (FDA) approved drugs of all 
manufacturers that enter into this rebate agreement. 
 
Mifepristone, when used in combination with misprostol, is used to terminate 
a pregnancy. Please note that the FDA and the manufacturer have placed 
restrictions on the distribution of mifepristone. Furthermore, the FDA has 
determined that a Medication Guide is necessary for women to use mifepristone 
safely. The FDA procedures include a requirement that the physician ask the 
woman to sign a Patient Agreement statement that she has decided to end her 
pregnancy. These restrictions may require changes in the usual billing and 
monitoring procedures as states apply these restrictions to Medicaid 
coverage. 
 
Federal financial participation for mifepristone is available only when 
consistent with the applicable Hyde Amendment restrictions. The Hyde Amendment 
limits the use of federal funds for abortions to terminate a pregnancy 
resulting from an act of rape or incest or in the case where a woman suffers 
from a physical disorder, physical injury, or physical illness, including a 
life-endangering physical condition caused by or arising from the pregnancy 
itself, that would, as certified by a physician, place the woman in danger of 
death unless an abortion is performed. 
 
The drug rebate law does not supercede state laws that set otherwise 
permissible limitations and protections, such as requirements for parental 
notification and informed consent. 
 
Under the provisions of the drug rebate law, federal financial participation 
is available on January 22, 2001. Because of the restrictions placed on the  dispensing of the drug and the limitations of federal financial participation, 
we will consider several factors in determining a state&#39;s compliance with 
the drug rebate provisions in section 1927. In particular, these factors 
include a state&#39;s procedures to ensure compliance with the Hyde Amendment 
and its authority to place restrictions on coverage of drugs under Section 
1927(d), its authority for drug use review under Section 1927(g), and its 
authority under other state laws. 
 
Thank you for your attention to this matter. If you have any questions, 
please contact Cheryl Austein-Casnoff at 410-786-4196. 
 
/s/ 
 
Penny R. Thompson 
 
Acting Director 
 
Center for Medicaid and State Operations 
 
cc: 
 
HCFA Regional Administrators 
 
HCFA Associate Regional Administrators for Medicaid and State Operations 
 
Lee Partridge 
 
Director, Health Policy Unit 
 
American Public Human Services Association 
 
Joy Wilson 
 
Director, Health Committee 
 
National Conference of State Legislatures 
 
Matt Salo 
 
Director of Health Legislation 
 
National Governors&#39; Association 
 
Brent Ewig 
 
Association of State and Territorial Health Officials