Medicaid provides health coverage for millions of Americans, including many with substantial health needs who rely on Medicaid drug coverage for both acute problems and for managing ongoing chronic or disabling conditions. Though the pharmacy benefit is a state option, all states provide pharmacy benefit coverage. States administer the benefit in different ways but within federal guidelines regarding, for example, pricing, utilization management, and rebates. Due to federally required rebates, Medicaid pays substantially lower net prices for drugs than Medicare or private insurers. After a sharp spike in 2014 due to specialty drug costs and coverage expansion under the Affordable Care Act (ACA), Medicaid drug spending growth has slowed, similar to the overall US pattern; however, state policymakers remain concerned about Medicaid prescription drug spending as spending is expected to grow in future years. Due to Medicaid's role in financing coverage for high-need populations, it pays for a disproportionate share of some high-cost specialty drugs. In addition, Medicaid is required to cover the "blockbuster" drugs increasingly entering the market as a result of the structure of the pharmacy benefit. Policymakers' actions to control drug spending have implications for beneficiaries' access to needed prescription drugs. To better understand how the Medicaid pharmacy benefit is administered across the states, KFF and Health Management Associates conducted a survey of all 50 states and the District of Columbia (DC) in 2019.
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