Does the Privacy Rule permit state Medicaid agencies to disclose protected health information to pharmaceutical manufacturers and third party data vendors for purposes of validating claims under the Medicaid Drug Rebate program?

Answer:

Yes. The Privacy Rule permits State Medicaid agencies to disclose protected health information, such as prescription numbers, to pharmaceutical manufacturers and third party data vendors that assist the pharmaceutical manufacturers, for purposes of validating claims submitted under the Medicaid Drug Rebate program. Because the amount of the rebate is based on drug utilization by individual enrollees, such disclosures are permitted as part of a State Medicaid agency’s payment activities. See 45 CFR 164.502(a)(1)(ii) and the definition of “payment” at 45 CFR 164.501.

A business associate agreement is not required to make these disclosures. State Medicaid agencies are required by law to disclose certain information to drug manufacturers as part of the drug rebate program. To the extent that the law requires a disclosure, the minimum necessary standard does not apply. (See 45 CFR 164.512(a) for further information and limitations on disclosures required by law.) To the extent that protected health information is disclosed for payment purposes but not pursuant to a legal requirement, the State Medicaid agency must make reasonable efforts to limit that information to that which is the minimum necessary to adjudicate the rebate claims. See 45 CFR 164.502(b) and 164.514(d) for more information on the minimum necessary standard.

Created 6/5/03