•  In 1990, Congress passed the Omnibus Budget Reconciliation Act, which helped establish the Medicaid Drug Rebate Program (MDRP) under section 1927(a) of the Social Security Act. This required drug manufacturers to enter into, and have in effect, a National Drug Rebate Agreement (NDRA) with the Secretary of the Department of Health and Human Services (HHS) in exchange for state Medicaid coverage of most of the manufacturer’s drugs.1
  • In 1992, under Section 602 of Public Law 102-585, the “Veterans Health Care Act of 1992,” Congress enacted section 340B of the Public Health Service Act (PHSA). This extended those rebate offers to certain Covered Entities. “Covered Entities” are those healthcare organizations that serve the country’s uninsured, low-income, and indigent populations.2
  • Section 340B(a)(5)(A) (the Public Health Service Act) prohibits duplicate discounts; that is, manufacturers are not required to both provide a 340B price and pay the state a rebate under the Medicaid drug rebate program for the same drug. To help achieve this end, Health Resources & Services Administration (HRSA) established the Medicaid Exclusion File (MEF) for Medicaid fee-for-service (FFS) claims as the mechanism to assist 340B covered entities, states, and manufacturers in avoiding duplicate discounts.3

Alabama Medicaid utilizes the HRSA Medicaid Exclusion File to identify 340B covered entities to help prevent duplicate discounts. It is the covered entity’s responsibility to ensure that they are listed on the HRSA Medicaid Exclusion File in order to prevent duplicate discounts.


For more detailed information, please see the links below for our Administrative Code and Provider Billing Manual:

 For more general information regarding the 340B Drug Pricing Program (including the Medicaid Exclusion File), please visit the websites below:



1. 42 U.S. Code 1396r-8

2. Veterans Health Care Act of 1992, Public Law 102-585 | HRSA

3. Medicaid Exclusion Reports (hrsa.gov)

4. Duplicate Discount Prohibition | HRSA