CMS rejected a proposal from the Massachusetts Department of Health and Human Services that would have allowed the state to limit the drugs covered by its Medicaid plan, according to The Hill.
Drug manufacturers provide discounts in order to be covered by Medicaid, but the Massachusetts Medicaid office argued that even with these discounts the cost of prescription drugs is too high.
CMS sent letter to state officials stating that if they want to limit the drugs covered by Medicaid, they would not receive the discounts and would have to negotiate directly with drug companies.
"The state would have to negotiate directly with manufacturers and forgo all manufacturer rebates available under the federal Medicaid drug rebate program. The state could then be provided flexibility to exclude specific drugs from coverage based on cost effectiveness or other approved criteria, or to employ a closed formulary structure similar to Medicare Part D or commercial plan formularies," the letter stated. "Under such an approach, the state would have to ensure that federal expenditures under the demonstration would not exceed federal expenditures incurred without the demonstration."