Medicaid Coverage Processes for Innovative Therapies Vary by State

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Avalere research finds that state Medicaid programs have taken a variety of approaches to coverage policy development for innovative therapies, highlighting opportunities for increased consistency and transparency.


An increasing number of innovative therapies, including cell and gene therapies, have come to market in recent years. Many of these therapies have new mechanisms of action and treat small patient populations with serious conditions and unmet medical needs. Several of these therapies are particularly relevant to patient populations who receive insurance coverage through Medicaid because Medicaid covers children and individuals with disability. While the Medicaid Drug Rebate Program requires states to provide coverage for all outpatient drugs, states have flexibility to shape coverage policies and access requirements.

To provide insight into state approaches to coverage and management for innovative medical benefit therapies, Avalere researched state Medicaid fee-for-service (FFS) coverage decision-making processes for medical benefit drugs and specific coverage policies for 2 innovative therapies (1 gene therapy and 1 infused therapy) approved in the last 5 years (see the methodology section for more details). The therapies researched treat rare genetic disorders with onset in childhood and are therefore likely to be relevant for populations enrolled in Medicaid. Avalere conducted the research across 10 states (AZ, CA, FL, GA, MA, NJ, NY, NC, TX, and WA) that represent a variety of approaches to managing Medicaid benefits and have high Medicaid enrollment.

Medicaid Drug Review Processes for Medical Benefit Drugs

While state Medicaid processes for reviewing coverage for pharmacy benefit drugs are relatively standardized, states’ processes for making coverage decisions for medical benefit drugs vary more significantly.

Using publicly available information from state Medicaid websites for the 10 states researched, Avalere assessed each state’s approach to reviewing coverage for medical benefit drugs (i.e., whether the state FFS program has a Pharmacy & Therapeutics (P&T) committee, Drug Utilization Review (DUR) board, or other body that reviews medical benefit drugs), in addition to the degree of stakeholder input accepted as part of the coverage review process.

Of the 10 states researched, Avalere found that 8 states (AZ, CA, FL, GA, NC, NJ, NY, and WA) have a P&T committee, DUR board, or other advisory committee that reviews medical benefit drugs.

  • Public Meetings: 6 of these states (AZ, FL, GA, NC, NY, and WA) have public meetings with specific opportunities for stakeholder or public comments. While CA has an advisory committee to review medical benefit drugs, it does not hold public meetings. NJ’s meetings are open to the public but, publicly available information on the opportunity and process for stakeholder input is limited.
  • Stakeholder Input: States have various requirements and limitations around stakeholder input. For example, the length of oral testimony is limited to 3 minutes or less in several states. GA does not allow participation from manufacturers, and AZ limits written information manufacturers or pharmacy benefit managers can provide to certain studies and published literature.
  • Meeting Cadence: While most states with drug review committees meet on a regular cadence (typically quarterly) some states, including NY and NC, meet on an ad hoc basis.
    Meanwhile, 2 states (MA and TX) do not have a designated P&T committee or DUR board to review medical benefit drugs. These states do not publicly post information on their Medicaid websites regarding any standardized processes that may be in place for review of medical benefit drugs.

Medicaid Coverage Policies for Innovative Therapies

States have adopted various approaches in their coverage policies to manage the 2 drugs included in Avalere’s research. For instance, states may:

  • Make coverage determinations on a case-by-case basis rather than implementing formal coverage policies.
  • Require prior authorization to manage and ensure appropriate utilization.
  • Implement coverage criteria that may be more restrictive than the Food & Drug Administration (FDA) label for the product (e.g., coverage criteria aligned with the clinical trial patient population rather than the patient population included in the FDA label).
  • Carve specific drugs or a class of drugs out of Medicaid Managed Care Organization (MCO) contracts and manage the drug via FFS. Carving out is a strategy some states use to allow for more direct management of a drug or class of drugs while ensuring adequate MCO payment rates and mitigating risk for MCOs that may have a disproportionate number of patients needing rare disease treatment.

For the 2 innovative therapies researched across the 10 states, Avalere found that many states have either not published formal FFS coverage policies or implement coverage policies that are more restrictive than the FDA label. States’ approaches to developing coverage policies also varied depending on each therapy. Specifically, 4 states (AZ, GA, NJ, and WA) have not published formal FFS coverage policies for at least 1 of the innovative therapies researched. Of the 6 states where coverage policies were available, 4 (CA, MA, NY, and NC) had policies that were more restrictive than the FDA label for at least 1 of the innovative therapies (Figure 1).

Figure 1. State Medicaid FFS Coverage Policies for 2 Innovative Therapies in 10 Selected States
Figure 1. State Medicaid FFS Coverage Policies for 2 Innovative Therapies in 10 Selected States

Considerations for Patient Access

While states have flexibilities in the administration of their Medicaid programs, including the development of coverage policies, findings from this analysis highlight opportunities to enhance consistency and transparency in the coverage decision-making process across state Medicaid programs. Currently, patient and caregiver experience and access to innovative therapies may vary considerably by state. This includes different opportunities to provide input and engage with decision makers, mixed availability of information about coverage policies, coverage policies that may be challenging for non-provider audiences to parse, and medical necessity criteria that is more restrictive than the product’s FDA label.

These differences in state coverage approaches can lead to various access barriers for patients and may have unintended impacts, including delays in treatment. For example, while utilization management requirements such as prior authorization can help ensure appropriate access and utilization of innovative therapies, in states with coverage policies that are more restrictive than the FDA label, some patients may not be able to access treatments even if they are eligible per the FDA label. Additionally, some states may not develop formal coverage policies for certain innovative therapies due to the relatively small patient population that can be treated or may take more time to review available data. However, the absence of publicly available, formal coverage policies in some states may lead to delays in treatment and unpredictability for patients and caregivers if coverage decisions are made on a case-by-case basis.

Funding for research provided by the Biotechnology Innovation Organization. Avalere maintained editorial control.


Avalere assessed publicly available documents on state FFS coverage processes and policies on state Medicaid websites. Researched materials included documents on committee rules, minutes, and state statutes and regulations to determine committee responsibility for reviewing medical benefit drugs. Avalere also reviewed the most recent publicly available coverage policies for the 2 selected medical benefit products. Coverage policies were determined to be “unavailable” if the state had published policies for other drugs but did not have a specific policy for the selected product. Avalere determined a state coverage policy to be beyond (i.e., more restrictive than) the FDA label if the state required information not included on the FDA-approved package labeling under the Indications and Usage; Dosage and Administration; Contraindications; Warnings and Precautions; Adverse Reactions; or Use in Specific Populations sections.

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