CMS Allows Tennessee to Adopt a Medicaid Closed Formulary Without Giving Up Rebates

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On January 8, 2021, the Centers for Medicare and Medicaid Services (CMS) approved a Tennessee waiver proposal for a demonstration project under § 1115 of the Social Security Act. The project provides a series of flexibilities, including giving the state authority to implement a “commercial-style” closed drug formulary without losing statutory Medicaid drug rebates. Namely, the state will have the option to exclude certain medications when there is at least one drug available per therapeutic class, and to exclude certain new drugs from its formulary. While there will be exceptions for protected drug classes and specialty drugs, many patients could still lose access to their current medications, resulting in non-medical switching. The new program will begin immediately and is authorized to last through December 31, 2030. Read the CMS press release here.

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