News Release

What Initiatives Are States Considering To Control Prescription Drug Costs in Medicaid?

Rising Medicaid spending on prescription drugs has prompted many states to look for new ways to control such costs. Although drug spending increased more slowly in 2016 than in the previous two years, and although such expenditures constitute only six percent of all Medicaid spending (compared to 10% of national health spending), the high cost of specialty drugs continues to be a particular concern among Medicaid policy directors.

A new issue brief from the Kaiser Family Foundation highlights the range of issues and recent initiatives that states are considering in this policy area. The state actions come at a time of increasing attention among policymakers to the cost of prescription drugs in health programs like Medicaid and Medicare and growing public concern about spending for prescription drugs. In its new budget, for instance, the Trump administration this month proposed changes to Medicare drug policy as well as granting states additional flexibility in negotiating prices and structuring their Medicaid drug benefit.

The new brief, Snapshots of Recent State Initiatives in Medicaid Prescription Drug Cost Control, reviews the structure of the prescription drug benefit in Medicaid and the traditional policy levers states have used to control drug spending. It also highlights new state strategies to contain costs, such as efforts to obtain greater rebates, actions concerning generic drugs and biosimilar alternatives, transparency laws and new efforts to draw on federal resources.

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The independent source for health policy research, polling, and news, KFF is a nonprofit organization based in San Francisco, California.