Each state designs their own Medicaid program within broad federal guidelines and can decide whether to provide prescription drug coverage, an optional benefit under the Medicaid program. All states currently provide prescription drug coverage with some states administering pharmacy benefits directly and other states using Medicaid managed care plans to deliver pharmacy benefits to beneficiaries.
Across the country, Medicaid spending on prescription medicines remains low. In 2016, Medicaid programs spent on average just 5 percent of their budgets on retail prescription medicines, a number that has remained consistent over time and is projected to remain a small share. At the same time, biopharmaceutical manufacturers paid more than $30.5 billion in 2016 in mandatory and negotiated supplemental rebates to the Medicaid program, shared between states and the federal government.