Medicaid Coverage for Prescription Medications: What’s Included in 2025

When you’re on Medicaid, getting your prescriptions shouldn’t mean choosing between medicine and rent. But knowing what’s actually covered - and what’s not - can feel like navigating a maze. In 2025, Medicaid covers prescription drugs for over 85 million Americans, but the rules vary wildly from state to state. What’s covered in North Carolina might be denied in Florida, even if you’re taking the same pill. So what does Medicaid really pay for? And why do some drugs require endless paperwork just to get approved?

Almost All States Cover Prescriptions - But Not the Same Ones

Federal law doesn’t require Medicaid to pay for prescription drugs. Yet every single state, including Washington D.C., does. Why? Because without drug coverage, people with chronic conditions like diabetes, asthma, or depression would end up in emergency rooms or hospitals - costing far more than the meds themselves. So states stepped in.

But here’s the catch: while coverage is universal, the list of approved drugs isn’t. Each state builds its own Preferred Drug List (PDL), also called a formulary. This list sorts medications into tiers. Tier 1 usually includes generics - the cheapest, most common versions of a drug. Tier 2 has brand-name drugs. Tier 3 or 4? That’s where specialty drugs live: expensive treatments for cancer, hepatitis C, or rare autoimmune diseases.

In North Carolina, for example, CVS Caremark manages the PDL as of October 2025. Generic drugs like metformin or lisinopril are in Tier 1, with copays as low as $1. Brand-name drugs like Lipitor or Humira land in Tier 2, with copays around $10-$25. But if your doctor prescribes a drug that’s not on the list at all? You’re out of luck - unless you jump through hoops.

Step Therapy: You Have to Fail First

One of the biggest surprises for new Medicaid beneficiaries? You might not get the drug your doctor recommends right away. Many states enforce step therapy - also called “trial and failure.” This means you have to try two cheaper, preferred drugs first. Only if those don’t work (or cause side effects) will Medicaid approve the one your doctor actually wants.

In North Carolina, this applies to most chronic conditions. If you have depression and your doctor wants to prescribe Wellbutrin XL, you might first need to try two SSRIs like sertraline or escitalopram. If those didn’t help - and your doctor documents why - then Medicaid will cover Wellbutrin. But if you skip the step therapy and just ask for the brand-name drug? The pharmacy will deny it. No exceptions.

This rule exists to save money. According to the Medicaid and CHIP Payment and Access Commission, step therapy cuts state drug spending by 15-25%. North Carolina saved $127 million between 2010 and 2023 just by using this system. But for patients? It can mean weeks of trial, error, and frustration.

Prior Authorization: The Paperwork Wall

Some drugs - especially high-cost ones - require prior authorization. That’s a formal request from your doctor to Medicaid, explaining why you need this specific drug. It’s not just a form. It’s a medical letter, often with lab results, previous treatment history, and proof that other drugs failed.

For example, if you have Type 1 Diabetes and need premixed insulin, North Carolina allows prior authorization to last up to three years - if your doctor provides the right documentation. But if you’re on a new drug like Ozempic for weight loss or diabetes, you’ll likely need a fresh request every year.

The process isn’t fast. The Medicare Rights Center found that 63% of Medicaid beneficiaries waited an average of 7.2 business days just to get a prior authorization approved. Appeals? That’s 14.5 days on average. And if your doctor’s paperwork is incomplete? The request gets denied. Then you start over.

But here’s the good news: 78% of denied requests were overturned on appeal - if the doctor submitted full clinical notes. So if your request gets rejected, don’t give up. Ask your doctor to resubmit with more detail.

What’s Not Covered? The Hidden Exclusions

Not every drug you’ve heard of is covered. In October 2025, North Carolina removed nine drugs from its formulary entirely - including Vasotec, Trulance, and Relistor - because the manufacturers stopped offering rebates. No rebate? No coverage.

Other common exclusions:

• Drugs used for cosmetic purposes (like minoxidil for hair loss)
• Over-the-counter medications (even if your doctor recommends them)
• Drugs for weight loss unless tied to a diagnosed condition like obesity-related diabetes
• Some fertility treatments
• Drugs approved only for off-label uses (unless there’s strong clinical evidence)

Even more confusing: some drugs change status mid-year. Epidiolex®, a CBD-based epilepsy treatment, was moved from “preferred” to “non-preferred” in July 2025 in North Carolina. That means your copay jumped - even though the drug didn’t change.

Costs: Copays, Deductibles, and Extra Help

Most Medicaid beneficiaries pay nothing for prescriptions. But not all.

In many states, you’ll pay a small copay - $1 to $5 for generics, $10 to $25 for brand names. Some states have annual caps, but most don’t. The real relief comes from the Extra Help program - a federal subsidy for low-income people on Medicare and Medicaid.

If you qualify for Extra Help in 2025, your drug costs drop dramatically:

• $0 monthly premium
• $0 deductible
• Maximum $4.90 copay for generics
• Maximum $12.15 for brand-name drugs
• After spending $2,000 in a year? You pay $0 for everything else

And here’s the kicker: 1.2 million people who qualify for Extra Help don’t even know it. If you’re on full Medicaid, get SSI, or get help paying your Medicare Part B premium, you’re automatically eligible. But you have to apply - or ask your caseworker.

Network Pharmacies and Mail-Order Rules

You can’t just walk into any pharmacy. Medicaid only covers prescriptions filled at in-network pharmacies. Most states use big pharmacy chains like CVS, Walgreens, or Walmart - but some only cover local independents.

For maintenance drugs (like blood pressure or thyroid meds), many Medicaid programs require you to use mail-order services. You’ll get a 90-day supply shipped to your house, often at a lower cost. If you insist on filling at a local pharmacy? You might pay more - or get denied.

And if you move? Your coverage doesn’t follow you. Medicaid is state-based. If you relocate from North Carolina to Georgia, your formulary changes. You’ll need to reapply for prior authorizations, and your doctor might need to switch your prescriptions.

Why Do These Rules Exist?

It’s not about denying care. It’s about managing billions.

Medicaid spends $64.3 billion a year on prescription drugs - nearly 10% of its total budget. And while generics make up 89% of prescriptions, they only cost 27% of the total. The real driver of spending? Specialty drugs - just 3% of prescriptions, but 42% of the cost.

States use formularies, step therapy, and prior authorization to negotiate lower prices. The Medicaid Drug Rebate Program forces drugmakers to give back a portion of their sales - often 25% or more. Without these tools, states couldn’t afford to cover the drugs at all.

But there’s a balance. In 2025, CMS announced new guidance requiring states to prove their formularies don’t block “medically necessary” treatments. That means if a drug is the only option for your condition - and you’ve tried everything else - you should get it.

What You Can Do

If you’re on Medicaid and struggling to get your meds:

1. Check your state’s current PDL. Search “[Your State] Medicaid Preferred Drug List 2025” - it’s usually on the health department website.
2. Ask your pharmacist: “Is this on the formulary? Do I need prior authorization?”
3. If denied, ask your doctor to submit a letter of medical necessity - with specifics: symptoms, failed alternatives, lab results.
4. Apply for Extra Help if you’re on Medicare too. It’s free and cuts costs dramatically.
5. Use mail-order for long-term meds. It’s cheaper and more reliable.
6. Call your State Health Insurance Assistance Program (SHIP). They help for free - no appointment needed.

What’s Changing in 2026?

New rules are coming. In 2026, CMS will require states to show their formularies don’t create “unreasonable barriers” to care. That could mean fewer step therapy rules and faster prior auth approvals.

Also, 22 states are testing new payment models for gene therapies - treatments that cost over $2 million per dose. These programs tie payment to results. If the drug works, Medicaid pays. If not? The drugmaker refunds part of the cost.

And the Federal Upper Limit for generics? Experts are pushing to lower it from 250% to 225% of the average manufacturer price. That could save Medicaid $1.2 billion a year - and free up funds for more essential drugs.

Bottom Line

Medicaid covers most prescription drugs - but it’s not automatic. You need to know your state’s rules, your formulary, and your rights. The system is designed to save money, but it shouldn’t stop you from getting the care you need. If you’re denied, fight back - with documentation. If you’re confused, ask for help. You’re not alone. Millions are navigating the same system. And with the right steps, you can get your meds - without the stress.