Tennessee is trying to shake up the way Medicaid pays for drugs. Will they succeed where Massachusetts failed?
Tennessee just submitted a highly controversial plan to rework the way the federal government funds that state’s Medicaid program. I’m paying attention to the so-called “block grant” proposal because it would also shake up how the state pays for drugs. And that idea is already upsetting the drug industry and advocates across the political spectrum.
The state is asking the federal government to greenlight a so-called “closed formulary,” under which the state could deny access to certain high cost drugs. Under current law, Medicaid is required to cover virtually every drug on the market, but proponents of a closed formulary say it would give states better leverage to negotiate with drug companies over the prices they charge. Under the Tennessee proposal, the Medicaid program could cover just one drug per class, meaning, for example, they could only cover one antidepressant or one HIV medicine.
Groups like BIO, PhRMA, the Arthritis and Cystic Fibrosis Foundations and Families USA were unified in their opposition to the proposal when it was first teased in September.
The idea is facing an uphill battle, however, because the Trump administration already rejected a similar proposal from Massachusetts. In fact, no expert STAT spoke with was very hopeful the Trump administration would support such an idea.
“I'd be shocked if CMS approved the request,” said Nick Bagley, a law professor at the University of Michigan. “Nothing's changed except the name of the state requesting permission. But we shall see.”
So why is Tennessee pursuing this already-failed strategy? Edwin Park, a research professor at Georgetown University, told STAT he hypothesizes the state might be banking on the fact that the Trump administration has been openly calling for states to try block granting their Medicaid program.
The state is asking the federal government to greenlight a so-called “closed formulary,” under which the state could deny access to certain high cost drugs. Under current law, Medicaid is required to cover virtually every drug on the market, but proponents of a closed formulary say it would give states better leverage to negotiate with drug companies over the prices they charge. Under the Tennessee proposal, the Medicaid program could cover just one drug per class, meaning, for example, they could only cover one antidepressant or one HIV medicine.
Groups like BIO, PhRMA, the Arthritis and Cystic Fibrosis Foundations and Families USA were unified in their opposition to the proposal when it was first teased in September.
The idea is facing an uphill battle, however, because the Trump administration already rejected a similar proposal from Massachusetts. In fact, no expert STAT spoke with was very hopeful the Trump administration would support such an idea.
“I'd be shocked if CMS approved the request,” said Nick Bagley, a law professor at the University of Michigan. “Nothing's changed except the name of the state requesting permission. But we shall see.”
So why is Tennessee pursuing this already-failed strategy? Edwin Park, a research professor at Georgetown University, told STAT he hypothesizes the state might be banking on the fact that the Trump administration has been openly calling for states to try block granting their Medicaid program.
“The administration is openly eager to approve states capping themselves,” Park said. “Maybe they’re thinking we can get this through and the administration will approve this, even though Massachusetts was rejected, because it is part of this overall cap proposal.”
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