One Year After Approval, Closed Formulary Waiver Is in Limbo

In January 2021, the outgoing Trump administration approved a Medicaid waiver that would have allowed Tennessee to do something novel: implement a “commercial-style” closed drug formulary while still receiving statutory Medicaid rebates for covered drugs. In the year that’s followed, however, it has become clear that the demonstration program faces long odds regarding whether it will ever actually be implemented.

First, the waiver program — known as TennCare III — is the subject of a lawsuit filed in April 2021 by the National Health Law Program, the Tennessee Justice Center and King & Spalding LLP on behalf of Tennessee Medicaid enrollees. The lawsuit challenges the demonstration program on procedural grounds, arguing that the Trump administration did not provide the required public comment period when it approved Tennessee’s waiver, and on substantive grounds, saying CMS exceeded its authority under Section 1115 of the Medicaid statute in approving the waiver.

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• Radar on Drug Benefits