SMDL # 01-009  
January 18, 2001 
Dear State Medicaid Director: 
This letter addresses concerns that have been raised to the Health Care Financing 
Administration (HCFA) regarding the ability of certain AIDS Drug Assistance 
Programs (ADAPs) to fully participate in the ADAP 340B rebate option. The ADAP 
340B rebate option was first established by the Health Resources and Services 
Administration (HRSA) through their Federal Register Notice dated June 29, 1998 
(enclosed). The rebate option is designed to work for ADAPs much the same way 
that the Medicaid Drug Rebate Program works for State Medicaid Agencies. ADAPs 
provide reimbursement to local pharmacies for a drug; the ADAPs then submit claims 
for rebates to the manufacturer of that drug. The manufacturer then sends a rebate 
to the ADAP. 
The difference between the Medicaid Drug Rebate Program and the ADAP 340B 
rebate option is that in the Medicaid Drug Rebate Program, State Medicaid Agencies 
have access to information regarding the Unit Rebate Amount (URA). The URA is 
based on confidential pricing information which participating manufacturers are 
required by law to submit to HCFA for purposes of administering the Medicaid Drug 
Rebate Program. HCFA, in turn, provides the URA to State Medicaid Agencies for the 
purpose of requesting Medicaid rebates from manufacturers. ADAPs, however, do not 
have access to the URA pricing information. Because they do not know what amount 
of rebate to expect from manufacturers when they submit rebate claims, ADAPs 
cannot verify that they have received the full amount of rebate from manufacturers. 
I am urging you to work with the ADAP in your State to assist in the submission of 
rebate claims to manufacturers within the requirements of the drug pricing 
confidentiality provisions. For example, the ADAP could provide information on 
rebate claim forms regarding the number of units of each drug that were dispensed 
on a quarterly basis. The ADAP could then send the claim forms to the Medicaid 
agency to add the URA information to the form. Your agency would then submit the 
claim form to the manufacturer on behalf of the ADAP. Once the ADAP receives the 
rebate from the manufacturer, your agency can again assist the ADAP by verifying 
that they received the full rebate amount due. It is our understanding that several 
State Medicaid agencies already provide this assistance to the ADAPs in their States 
and do not find it to be a significant workload. 
Thank you in advance for any assistance you can offer to ADAPs to help them 
operate their programs in the most efficient manner possible. 
Sincerely, 
/s/  
Timothy M. Westmoreland  
Director 
Enclosure  cc:  
HCFA Regional Administrators  
HCFA Associate Regional Administrators for Medicaid and State Operations  
Joann Spearman, Health Resources and Services Administration  
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' Association  
Julie Scofield, Executive Director - National Alliance of State and Territorial AIDS 
Directors