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LFC: Medicaid pharmacy costs surged; GLP‑1 drugs and top biologics driving growth as state adopts preferred drug list
Summary
Legislative Finance Committee staff told lawmakers that New Mexico’s Medicaid medical pharmacy spending rose 67% from 2021 to 2024, driven in part by GLP‑1 medications; the Health Care Authority is implementing a preferred drug list and procured Prime Therapeutics to administer it.
Legislators heard a data-driven update from the Legislative Finance Committee on the rising cost of prescription drugs in New Mexico’s Medicaid program and possible policy tools to rein in spending.
Ruby Ann Esquivel, presenting the Legislative Finance Committee’s pharmaceutical update, said that medical pharmacy costs in New Mexico’s Medicaid program increased 67% between 2021 and 2024. “So in New Mexico's Medicaid program, between 2021 and 2024, our medical pharmacy costs have increased by 67%,” Esquivel said.
Esquivel and Dr. Harry Rommel laid out a few drivers: rapid uptake of GLP‑1 medications (for example, Ozempic and Wegovy), higher utilization of expensive specialty drugs (including cancer medications), and changes in Medicaid membership composition. They told the committee that the top 10 drugs accounted for about 20% of total Medicaid pharmacy spending and that the top‑10 drug spend rose about 15.7% from 2022 to 2024.
The presenters said New Mexico will implement a preferred drug list (PDL) for Medicaid to standardize coverage across fee-for-service and managed-care programs and to increase transparency and supplemental rebate collections. Esquivel said the Health Care Authority has issued an RFP and chosen Prime Therapeutics to operate the new PDL. She emphasized that the PDL will not apply step therapy or prior authorization requirements to medications for rare diseases, cancer, autoimmune conditions or substance use disorder.
Lawmakers questioned how rebates were incorporated into the numbers and raised concerns about impacts on independent and rural pharmacies. The LFC presenters said rebate data are incomplete in some datasets and that the Medicaid program has implemented higher fees and other measures to support independent pharmacies but that many independents push back that it is insufficient.
Several members also discussed long‑term cost–benefit considerations for GLP‑1 drugs, noting that patents and future generics could change cost dynamics. The committee heard that some states have adopted broader pharmacy reforms — for example, prohibiting spread pricing or imposing PBM registration fees — and members suggested reviewing other states’ approaches in advance of the legislative session.
What comes next: committee members asked staff to provide additional rebate and breakdown data where available and flagged potential bills to address pharmacy benefit manager regulation, rebate transparency, and targeted supports for independent pharmacies. The PDL implementation and supplemental rebate plans are underway at the Health Care Authority.
