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 understanding what’s covered - and what’s not - can feel like navigating a maze. In 2025, Medicaid covers outpatient prescription drugs for nearly 85 million low-income Americans, but the details vary wildly from state to state. What’s covered in North Carolina isn’t exactly the same as in Florida, even if both states follow federal rules. So what does Medicaid actually pay for? And why does your doctor have to jump through so many hoops just to get you the right pill?

Medicaid Covers Almost All Prescriptions - But Not Always the One You Want

By law, Medicaid doesn’t have to cover prescription drugs. But every state does - because it’s cheaper not to. Without drug coverage, people end up in emergency rooms with uncontrolled diabetes, asthma attacks, or infections that could’ve been treated with a simple antibiotic. So all 50 states and D.C. provide outpatient prescription drug coverage to nearly all Medicaid enrollees.

But here’s the catch: Medicaid doesn’t cover every single drug on the market. Instead, each state builds its own Preferred Drug List (PDL), also called a formulary. This list sorts medications into tiers based on cost, effectiveness, and how much rebate the drugmaker gives the state. The goal? Keep drugs affordable without cutting off access to essential treatments.

Tier 1 usually includes generics - the cheapest option. Think metformin for diabetes or lisinopril for high blood pressure. These often cost you $1 to $5 per prescription. Tier 2 is for brand-name drugs that don’t have a generic yet. You’ll pay more here - maybe $20 to $40. Tier 3? That’s where specialty drugs live: expensive treatments for cancer, hepatitis C, or rheumatoid arthritis. These can cost hundreds or even thousands, and getting them requires extra steps.

Step Therapy: You Have to Try the Cheaper Stuff First

Ever been told to try two other meds before they’ll approve the one your doctor picked? That’s step therapy - or “trial and failure.” It’s common in 38 states, including North Carolina and Florida. If your doctor prescribes a non-preferred drug, Medicaid might deny it unless you’ve already tried - and failed - at least two preferred alternatives.

For example, if you have depression and your doctor wants to prescribe Wellbutrin XL, Medicaid might require you to try two SSRIs like sertraline and escitalopram first. Even if those didn’t work for you before, you might have to go through the motions again. The system assumes that if a cheaper drug works, why pay more?

But this isn’t always safe or practical. Some patients with bipolar disorder, PTSD, or severe anxiety can’t safely cycle through multiple antidepressants. That’s why exceptions exist: if your doctor submits a detailed note explaining why step therapy won’t work for you - maybe due to past side effects, allergies, or documented treatment failure - Medicaid must review it. In North Carolina, 78% of denied prior authorizations get overturned when doctors include full clinical notes.

Prior Authorization: The Paperwork Hurdle

Some drugs require prior authorization - a formal request from your doctor to prove you need the medication. This isn’t just a form. It often needs lab results, diagnosis codes, proof you tried other options, and sometimes even letters from specialists.

For instance, if you have Type 1 Diabetes and need premixed rapid-acting insulin, North Carolina Medicaid allows prior authorization to last up to three years - if your doctor documents why you can’t use cheaper alternatives. But for other drugs like Epidiolex® (a CBD-based epilepsy treatment), coverage changed in July 2025: it moved from “preferred” to “non-preferred,” meaning you now need prior authorization even if you’ve used it successfully for years.

Processing times vary. The Medicare Rights Center found that initial requests take an average of 7.2 business days. Appeals? Nearly two weeks. That’s a long time if you’re running out of pills. And if your pharmacy doesn’t have the drug in stock, or your doctor’s office is slow to submit paperwork, you could go without.

What’s Not Covered? The List Keeps Changing

Medicaid formularies aren’t static. They change every few months - sometimes without warning. In October 2025, North Carolina removed nine drugs from its list entirely because they no longer qualified for federal rebates. That includes medications like Trulance (for constipation), Vanos Cream (for skin inflammation), and Uceris (for ulcerative colitis). If you were taking one of those, your pharmacy might have told you it’s no longer covered.

These removals aren’t random. They’re driven by money. If a drugmaker stops offering a big enough rebate to the state, Medicaid drops it. The state doesn’t say, “This drug is unsafe.” They say, “We can’t afford it.”

Some drugs are never covered at all. Over-the-counter medicines like ibuprofen or allergy pills? Not covered unless prescribed for a specific condition and approved through prior authorization. Weight-loss drugs like Ozempic or Wegovy? Almost never covered under standard Medicaid - even if your doctor says you need them for diabetes or heart disease. And fertility drugs? Usually excluded.

Extra Help: Lower Costs If You Qualify

If you have full Medicaid coverage, you automatically qualify for Extra Help - a federal program that slashes your out-of-pocket drug costs. In 2025, that means:

• $0 monthly premium
• $0 deductible
• Maximum $4.90 copay for generics
• Maximum $12.15 for brand-name drugs

Once you hit $2,000 in total drug costs for the year, you pay nothing for the rest of the year. And here’s the kicker: 1.2 million people who qualify for Extra Help don’t even know it. They’re paying full price because no one told them they’re eligible.

Medicaid enrollees don’t need to apply. If you’re on Medicaid, you’re enrolled in Extra Help automatically. Check your pharmacy receipt - if your copay is under $5 for a generic, you’re already getting it.

How to Get Your Meds Without the Stress

Here’s how to make this system work for you:

1. Know your state’s formulary. Visit your state’s Medicaid website. Look for “Preferred Drug List” or “Formulary.” North Carolina’s is updated in January, July, and October.
2. Ask your pharmacist. They see what’s covered every day. If your drug is denied, ask if there’s a preferred alternative.
3. Get your doctor to document everything. If you need an exception, your doctor’s note must include why step therapy won’t work - not just “patient needs it.”
4. Use in-network pharmacies. Mail-order pharmacies often offer lower copays for maintenance meds. Check your plan’s list.
5. Appeal denials. If you’re denied, appeal. With full documentation, you have a high chance of winning.

And if you’re overwhelmed? Call your State Health Insurance Assistance Program (SHIP). They offer free, one-on-one help. Most beneficiaries need about three sessions to fully understand their coverage.

The Bigger Picture: Why This System Exists

Medicaid spends $64.3 billion a year on prescription drugs - nearly 10% of its entire budget. Generics make up 89% of prescriptions but only 27% of costs. Specialty drugs? Just 3% of prescriptions, but 42% of spending. That’s why states focus so hard on controlling those high-cost drugs.

Drug manufacturers pay billions in rebates to Medicaid through the federal Drug Rebate Program. States use those rebates to negotiate lower prices. But if a drugmaker refuses to offer a big enough discount, the state drops it. It’s not about medical need - it’s about budget math.

Still, the system is improving. In 2025, Medicaid beneficiaries can change their drug plans once a month - not just during a yearly enrollment window. And new federal rules coming in 2026 will require states to prove their formularies don’t block medically necessary care.

For now, the best thing you can do is stay informed. Know your formulary. Ask questions. Advocate for yourself. And if you’re struggling to pay for meds, you might be eligible for more help than you think.