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Medicaid is a federal-state entitlement program that pays for
health care and related services on behalf of certain low-income
individuals. Prescription drugs are an optional Medicaid benefit
and all states cover outpatient drugs. States can create
formularies, or lists of preferred drugs, but federal rules tend to
result in comprehensive coverage, even for beneficiaries enrolled
in Medicaid managed care plans. Pharmaceutical manufacturers that
voluntarily participate in Medicaid are required to pay rebates to
states on covered outpatient drugs, which help Medicaid receive
manufacturers' lowest or best price. States then share the rebate
they receive from pharmaceutical manufacturers with the federal
government. This book discusses Medicaid prescription drug pricing
and policies.
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