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States Seek Ways to Control Medicaid Drug Costs

Against the backdrop of the national drug pricing debate and mounting budget pressures, states are increasingly targeting prescription drugs as an avenue to curb overall Medicaid costs.

To manage Medicaid prescription drug costs, states have explored both traditional policy levers and novel approaches, such as:

  • preferred drug lists;
  • utilization management;
  • value-based purchasing;
  • drug importation from Canada;
  • drug spending caps;
  • all-payer rating setting; and
  • transparency initiatives.

Many newly-elected governors have indicated that lowering prescription drugs costs is a priority. For example, Wisconsin Governor-elect Tony Evers (D) expressed interest in exploring a drug spending cap for Medicaid, similar to an approach used in New York. Additionally, New Mexico Governor-elect Michelle Lujan Grisham (D) has proposed combining the purchasing power of the state’s Medicaid program with the public employee and retiree health plans to reduce drug costs.

America’s Essential Hospitals will host a Dec. 5 webinar to share more information about states’ endeavors to contain drug costs in Medicaid and the impact on essential hospitals. The association also published a recent blog post analyzing states’ efforts to curb rising Medicaid drug costs.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Kelcie Jimenez is a state policy analyst at America's Essential Hospitals.

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