DHS: Medicaid spending on GLP‑1 weight‑loss drugs is rising sharply; FY26–27 state share projected up $78.7 million

Department of Human Services officials told the House Human Services Finance and Policy Committee that Medicaid pharmacy spending on weight‑loss drugs has increased markedly and will raise state costs over the coming budget cycles.

CFO David Greenman told the committee the state saw limited coverage and uptake when the program first covered weight‑loss drugs in fiscal 2022, but the number of drugs and claims grew substantially through calendar 2024. Greenman said DHS projects a state share increase of $11.7 million in the 2024–25 biennium, $78.7 million in 2026–27 and $87.6 million in the planning years, driven primarily by increases in the number of claims.

Greenman explained the legal and program constraints that shape coverage: "In states where Medicaid does cover weight loss drugs, we are required to cover any FDA approved drug for weight loss as long as the manufacturer is willing to accept the Medicaid rebate program," he said. DHS noted it uses standard utilization controls — prior authorization and quantity limits — and that managed care plans similarly require approval before refills for adults when the medication is not producing intended weight loss.

DHS said the February forecast reflects updated claims and price data and an amendment to managed care contracts to align coverage with current utilization. Committee members asked whether the drugs’ long‑term health benefits (for example, preventing diabetes or reducing cardiovascular risk) could offset near‑term drug spending. Bailey and Greenman said there may be downstream health benefits but that those savings would likely appear beyond the four‑year budget horizon the forecast primarily uses; the department did not provide a fiscal estimate of long‑term offsets in the hearing.

On pricing, DHS staff said the sharp short‑term budget impact is driven mostly by the increased number of prescriptions rather than large year‑over‑year price increases per claim; officials also noted limits on sharing manufacturer price details because of rebate and procurement confidentiality.

DHS told the committee it will continue to use prior authorization, quantity limits and the drug formulary process to manage access; the budget office also pointed to governor’s proposals that would carve pharmacy out of managed care to increase rebate capture and to extend the drug formulary committee’s authority.