Press Release

PhRMA Statement on Tennessee Medicaid Demonstration

WASHINGTON, D.C. (January 14, 2021) – Pharmaceutical Research and Manufacturers of America (PhRMA) vice president Priscilla VanderVeer released the following statement:

“PhRMA strongly opposes the Trump Administration’s decision to approve this tone-deaf and disruptive waiver that will greatly restrict Medicaid’s ability to provide care to the state’s most vulnerable patients—including children and those with serious diseases. To make matters worse, this flawed decision jeopardizes access to lifesaving medicines and treatments for chronic conditions for the nearly 1.4 million vulnerable people who rely on TennCare and further exacerbates the challenges people are facing as a result of the COVID-19 pandemic.

“While PhRMA supports state efforts to expand insurance coverage for state residents, Tennessee’s waiver fails to ensure robust access to care, including medically necessary treatments, and raises serious concerns about the long-term impact on some of the state’s sickest and most vulnerable people.

“The waiver also violates federal law and Medicaid statute by allowing the use of closed formularies while maintaining statutorily mandated rebates on medicines in the Medicaid program. This would upend the careful balance struck between pharmaceutical manufacturers’ obligations to provide substantial rebates and states’ obligations to ensure patients’ access to most FDA-approved medicines. The unintended consequences of this approval would endanger access to life-saving health care for those who need it most.”


Additional Information:

Under the Medicaid Drug Rebate program, the Secretary of Health and Human Services and approximately 600 pharmaceutical manufacturers have contractually agreed for states to cover most FDA-approved covered outpatient medicines, and in exchange participating states get statutory manufacturer rebates. In 2019, manufacturers provided $35.9 billion in rebates nationwide, which are shared by the federal government and states, to the Medicaid program alone. Manufacturers rebated $683 million back to Tennessee and the federal government in 2019. States already have significant flexibility under the statute to manage drug spending. Current law already provides states with authority to create preferred drug lists, and even formularies, as well as use other statutory utilization management tools to manage drug spending. Limiting access to medicines in Medicaid is also proven to increase costs in other health care services that are a far greater strain on state budgets than prescription medicines, which make up just 4.1% of total Medicaid spending in Tennessee.

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