Many of our clients are pharmaceutical industry professionals working to increase access for Medicaid members to drugs, devices and therapies. These clients include manufacturers, PBMs and other organization types. The article below is based on our experience working with professionals who have successfully navigated this space. Concepts have been simplified for clarity.

Reading time: 7 minutes

Intended Reader: Pharmaceutical manufacturer Market Access teams newer to the Medicaid space

Key Concepts About Medicaid Rx Coverage

Before we can gain a proper understanding of a Medicaid P&T Committee, we need to cover a few key concepts first:

Prescription drug coverage is an optional Medicaid benefit
Much of Medicaid drug coverage in the U.S. is set at the federal level by the Department of Health and Human Services (HHS) via the Medicaid Drug Rebate Program (MDRP)
States can negotiate supplemental rebate agreements with manufacturers
States can also design and implement preferred drug lists (PDLs) and formularies, so long as they don’t conflict with the MDRP

If you are familiar with these concepts, you can skip down to the “Makeup of the Medicaid P&T” committee section.

States do not have to cover prescription drugs

Many people are surprised to learn that prescription drug coverage is an optional benefit for Medicaid programs. When a state chooses to cover it (all currently do), they agree to certain regulations promulgated by HHS. These regulations include covering drugs in the nationally-managed Medicaid Drug Rebate Program (MDRP) and also excluding certain drugs selected by HHS.

Relation to the federal Medicaid Drug Rebate Program (MDRP)

While a large portion of Medicaid drug coverage is determined centrally by HHS via the Medicaid Drug Rebate Program, any state Medicaid program that has a preferred drug list (PDL) or formulary separate from MDRP must also perform a range of oversight and management functions. Usually these activities are handled by a Pharmacy and Therapeutics (P&T) Committee. There are 46 states that have PDLs at the time of this insight article.^[1]

Supplemental Rebates, Preferred Drug Lists and Formularies

States can develop their own Medicaid PDLs and formularies, as long as non-preferred/ non-formulary drugs are available through a prior authorization process. (Certain classes of drugs can be excluded from coverage entirely, as discussed below). States often negotiate supplemental rebates with manufacturers of MDRP drugs in exchange for relaxed prior authorization and other criteria for members to access the drug.

What is a state Medicaid P&T Committee? What does it do?

Makeup of the Committee

Federal Medicaid law requires any state Medicaid P&T committee to include physicians and pharmacists. These are often appointed by the Governor in the state. They may also include researchers and advocates.

Typical P&T Committee Activities

While the P&T committees in the Medicaid payer space are very similar to those in the commercial space, the overall scope of authority and purposes are very different. Additionally, each state Medicaid program can have its own P&T committee, so it is important to become familiar with the procedures used by the different Medicaid programs you are working with for market access.

Common Medicaid P&T committee functions include:

Review and recommended classes of drugs for inclusion in the PDL
Consider efficacy, safety and cost for drugs on the PDL
Provide written reports to show clinical evidence considered in recommendations
Recommend limitations and protocols such as prior authorization policies and utilization restrictions
Annual review of all drug classes on PDL
Allow manufacturers to submit evidence related to drugs under review

Types of Restrictions Medicaid P&T Committees Can Place on Drugs and Medical Products

As long as policies are not in conflict with national MDRP coverage, a state can enact a wide range of restrictions.

They can establish prior authorization (PA) criteria- but a member PA request has to be answered within 24 hours, and has certain exceptions for emergency situations.

States can exclude drugs from a wide range of categories, using a list maintained by the HHS Secretary.

There also also some instances in which a state can actually exclude an MDRP-covered drug if it does not offer a significant clinical benefit over another drug the state has on their formulary.

Selected State Medicaid P&T Comparisons

The table below compares a few state Medicaid P&T committees in terms makeup of the committee and how often they meet.

State	Makeup of the committee	Schedule
WV	15 members, appointed by state HHS secretary, 3 year terms	At least quarterly
OR	11 members, 3 year term	At least annually, usually monthly
OH	10 members, appointed by Medicaid Director, 2 year terms	At least quarterly, with annual review of entire PDL
UT	9 members, Appointed by Medicaid Director, 2 year terms	At least quarterly

How You Can Better Navigate a State Medicaid P&T Committee in your Market Access Efforts

We help a range of pharmaceutical clients navigate these challenges, and are happy to discuss supporting your efforts any time.

Besides your own research into this topic, there are a few key tactics that can help you overcome some of the common challenges related to Medicaid P&T committees and market access:

Become familiar with the rules for presenting supporting evidence– Each state has different policies about how long and in what format a manufacturer or their representative can speak at meetings. They also have different rules about the types of clinical evidence that can be submitted.
Review the meeting minutes or a recent webinar recording of the P&T committee you are considering working with – most states now place copies of meeting minutes or webinar recordings online. Watching these videos will allow you to get a sense of how to committee operates as you form your approach.
Identify how the state manages larger evidence review projects– Some states conduct extensive projects on effectiveness (and cost-effectiveness) of certain product classes. These reviews will often occur over multiple years and involve a team of researchers

Reading time: 7 minutes

Intended Reader: Pharmaceutical manufacturer sales executives and marketing teams

Key Topics: The state by state nature of Medicaid programs, How PBMs are different in Medicaid, Variation across P&T committees

The State-by-state Nature of Medicaid Programs

*If you’ve seen one Medicaid program, you’ve seen one Medicaid program.*

One of the first differences pharmaceutical professionals notice is the uniqueness of each state Medicaid program. While there are national dynamics in play with some of the larger rebate programs, each state has a large degree of control over its coverage and reimbursement policies.

The main variables for a given state market include:

Fee-for-Service– How does the state handle drug coverage for members who are not in a managed care plan? Are some drugs covered under FFS but others are not?
Managed Care– What responsibility and authority do health plans operating in the state have for pharmacy benefits? For plans that are part of national brands, how centralized are those decisions?
Collaborative Care Models– In recent years, some states have implemented these models. In these models, benefit decisions are often made by a board. Examples include CCOs in CO and WA.

State laws and regulations– Each state will have a different set of regulations on how coverage decisions are made, benefit categories products will be assigned to, and how marketing and communications can be done for members about pharmaceutical benefits.

Use of Pharmacy Benefit Managers in the HHS Space

*The role of PBMs in Medicaid is different*

While pharmacy benefit managers (PBMs) are not unique to the Medicaid payer space, recent trends have shown the importance of understanding the impact the state government context has on PBM activities.

There are 3 key considerations for manufacturers evaluating the role of PBMs in Medicaid:

The PBMs goal of conserving public funds– Since Medicaid is funded with both federal and state tax dollars, spending on pharmacy has a high degree of visibility. This is most apparent during the annual budget process in a given state. There is generally more scrutiny on PBM activities in the Medicaid space because of the ongoing need to show cost savings with public funds.
The expanded scope of PBMs in the Medicaid space– Compared to PBMs in other payer spaces, Medicaid PBMs often take on extensive program management scope, including clinical drug reviews for states to inform decision-making (i.e., states outsourcing some P&T-type functions to PBMs). Medicaid PBMs also negotiate Medicaid supplemental rebates.
Recent concerns around transparency – While states have increased reliance on PBM services in recent years, there has also been some scale-back in certain state markets. This retraction is largely over spread pricing issues. There is a renewed call for transparency in PBM operations, and a new political focus on contracts.

Variation in Structure and Operation of P&T Committees

There are some similarities across states, but P&T operations vary widely

Federal law requires each state to have a P&T committee if the state wants to operate a Preferred Drug List (PDL). Each state must include physicians and pharmacists on the committee- but beyond this general requirement, each state can set its own procedures and schedules for the activities and decisions of the committee.

While states must cover any drugs on the federal Medicaid rebate program, coverage for other drugs is up to each state (or health plan if the state has delegated this to managed care). There has been a trend towards adopting more uniform PDLs for specific drug classes (in 2018, 14 state Medicaid programs had a uniform PDL)^[1]. Some states have also moved towards streamlining medical neccessity criteria with uniform clinical protocols.^[2]

While these trends toward standardization have been observed, wide variation by states is the norm.

Some states require utilization controls (such as prior authorization) for all new drugs before a P&T committee develops specific rules. Some states have rapid evaluation processes, but others have extensive protocols that can include pilots, meta-analyses and extensive expert review. These processes range from three months to one year for consideration of new drugs or newer / improved coverage for an existing drug. Like all things government, there is a political nature to the coverage and pricing in many Medicaid pharmacy programs that needs to be taken into account when addressing market access issues in a given state. In many states, the level of influence that the independent pharmacists association exerts can be the difference between coverage, or limited coverage with extensive controls. The role of advocacy organizations whose populations are impacted by your product is also often significant.

How You Can Address the Challenges and Complexities of the State Medicaid Pharmaceutical Environment

Besides your own research into this topic, there are a few key tactics that can help you overcome some of the common challenges related to improving market access in Medicaid markets. We assist clients with each of these strategies, and are happy to have a conversation anytime. If our services and expertise are a fit for your needs as you develop or execute your strategy, engaging with us is a simple process. If we are not the right fit, we are happy to make a referral to another firm who may be.

Train your account teams on the details of each state Medicaid program they call on. Knowing the fundamentals of each state program is critical. Most teams used to the commercial space are initially unaware of this need in Medicaid, and then quickly become overwhelmed by the learning curve.
Ensure your sales decks and messaging are aligned with the unique values and priorities in the Medicaid payer space. Telling the right story to a Medicaid audience is completely different than the normal narrative for commercial and Medicare Advantage audiences. Your sales collateral needs to account for the unique needs and perspectives of Medicaid program decision makers.
Evaluate what your traditional government affairs approach can and cannot do to help in the Medicaid space. Many manufacturers have a government affairs presence in multiple states. However, traditional government affairs approaches are often insufficient because of the complexity of players, advocates, and the economics of Medicaid financing.
Set realistic expectations of timelines in your sales planning– Increasing access for a drug in the Medicaid space can take years. While the volume of members in the Medicaid space can drive significant revenues, there is usually a significant time investment, sometimes multiple years, before favorable coverage policies are fully realized. If you do not set appropriate expectations internally, you will create disruption and confusion in your sales organization.

Tag: CBM-Rx

What role do Medicaid P&T committees play in pharmacy coverage decisions?