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Bill would let Medicaid buy lower-net-cost brand drugs and use standing orders for select over‑the‑counter items
Summary
Senate Bill 119 would let the Medicaid program substitute a national brand when its net price (after rebates) is lower than the generic and permit standing orders for certain over-the-counter products to be billed to Medicaid; DHHS estimated multimillion-dollar general-fund savings.
Senator James Gray introduced Senate Bill 119 with a simple analogy: if a national brand is cheaper than a store brand, buy the cheaper product. Department witnesses expanded the policy rationale to Medicaid pharmacy management.
Henry Littman, State Medicaid Director, told the committee current law requires the program to purchase a preferred (store/generic) product even when a brand's net price is lower after rebates. Littman said changing that rule could save an estimated $1.1 million in FY26 (implementation year) and grow to about $4.5 million in later years when fully implemented.
Jonathan Ballard, DHHS chief medical officer, described the bill's second component: permitting standing orders so selected over-the-counter (OTC) products that are therapeutically equivalent to prescription versions could be dispensed to Medicaid beneficiaries through a prescriber standing order and billed to Medicaid while prior authorization is applied to more expensive prescription versions.
Committee members asked about clinical safeguards and exceptions for narrow therapeutic-index drugs, pharmacist discretion, and fraud risks. DHHS said narrow-therapeutic-index medications are typically prescription-only and would not be covered by OTC standing orders; clinical exceptions and prior-authorizations would remain available and program-integrity measures (quantity limits and prior authorization reviews) could be applied to prevent abuse.
DHHS said the savings estimate was included in the governor's budget and house finance analyses; the department asked the committee to approve the statutory changes to permit the procurement and billing flexibility described.
