The Trump administration shot down Massachusetts’ request to try to rein in high drug costs by restricting coverage of certain drugs under Medicaid.
Massachusetts would have been the first state to experiment with creating a closed formulary, or list of approved drugs, if the Centers for Medicare and Medicaid Services had approved it. But the agency said the state would have to forgo all manufacturer rebates under the plan, and the state had wanted to continue receiving them.
“We appreciate Massachusetts’ efforts to tackle skyrocketing drug prices and look forward to working with the commonwealth to meet its goals of effectively managing its Medicaid pharmacy benefit,” said CMS Administrator Seema Verma in a statement Wednesday.
Massachusetts wanted to install a closed formulary for its Medicaid program, which would have restricted access to certain drugs. Under the state’s application filed in September, Massachusetts would have been able to block Medicaid coverage of drugs if there was limited evidence they were effective.
Typically, a state Medicaid program has to cover every drug approved by the Food and Drug Administration. But high-cost specialty drugs have put states in a financial bind. Massachusetts for instance, has seen drug spending on its Medicaid program double from $1.1 billion to $2.2 billion over the past five years.
CMS said in its response to Massachusetts that the state would have to forgo all manufacturer rebates to do the experiment and was concerned that the state wanted to still receive them.
The agency also sent a reminder to all states that their Medicaid programs must cover FDA-approved drugs. Other states are considering similar plans.
The denial of Massachusetts’ request comes as CMS has sought to expand state flexibility for Medicaid in other areas, such as giving states the power to install work requirements for able-bodied Medicaid beneficiaries.
CMS did approve a request from Massachusetts to give the state authority to provide continuous access to coverage for veterans, Gold Star spouses and Gold Star family members. The request is to ensure there is no disruption in their coverage in “certain months due to the receipt of income through a statue annuity,” the agency said.
The state’s Health and Human Services agency said it is disappointed with the denial and remains “committed to finding more innovative state-based solutions to reduce the growth in drug spending while maintaining access to necessary medications.”
CMS also approved a waiver to let Oklahoma be the first state in the nation to negotiate with drugmakers to insert value-based purchasing arrangements for certain drugs covered under Medicaid. A value-based purchasing agreement takes into account the effectiveness of a drug when determining its cost.
For Oklahoma, if a drug does not meet a certain clinical outcome, the drug maker must provide additional rebates for it, according to CMS.
