Administration Floats Program to Limit Medicaid Drug Coverage

The Trump administration unveiled a pilot Medicaid program that would allow participating states to negotiate drug prices by choosing the drugs covered for certain adults under age 65 — an approach that PhRMA strongly opposes.

The voluntary, demonstration program would test the concept of using a closed formulary, in a move aimed at limiting overall spending on Medicaid. Participating states would have to agree to a federal spending cap under the program.

Centers for Medicare and Medicaid (CMS) Administrator Seema Verma said the voluntary program — the Healthy Adults Opportunity — would provide a closed drug formulary similar to those in commercial health insurance markets, while still collecting federal drug rebates, giving states more negotiating power.

But PhRMA says it is strongly opposed to a closed-formulary approach for Medicaid and noted that CMS previously turned down a Massachusetts plan to use this approach in 2018. Verma responded via Twitter that the state was turned down because its proposal targeted a broader population.