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Arizona has become the latest state to seek permission from the federal government to limit the number of medicines that would be covered by its state Medicaid program, which is currently required to provide coverage for all treatments.

In a Nov. 17 letter to the U.S. Centers for Medicare and Medicaid Services, state officials argued they should be allowed to use the same tools that commercial insurers rely on to contain drug costs. And they insist such a move is needed in order to preserve the larger mission of providing adequate health coverage. Massachusetts made the same request in late September.


Essentially, state officials want CMS to eliminate a long-standing requirement for Medicaid programs to cover any drug and allow AHCCS to adopt a so-called closed formulary. This allows an insurer to provide coverage for only certain drugs that are made available on favorable terms. By doing so, state officials argue they would have more leverage to extract additional rebates from drug makers, which the companies pay to insurers in exchange for favorable coverage.

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