Medicaid Pharmacy Trend Report
™
2026 ELEVENTH EDITION
Contents
Contributors Tina Hawkins, PharmD, RPh Vice President, Account Management
01
Introduction
02
Medicaid Fee-for-Service trends and insights
04
Federal rebate update
07 08
Mina Kwon, PharmD, RPh
Senior Principal, Value and Access State Public Sector
Graycen Braucht, CPhT Business Analyst Associate
Kristin Haas Lead Health Informatics Analyst
Shelae Cheng
AMP cap repeal impact
Principal, Brand Marketing Strategy
External contributor Class and drug trends
Doug Brown, RPh, MBA Senior Vice President, Value and Access Red Nucleus
11
Top 10 therapeutic classes driving net trend
12
Medicaid pharmacy economics
14
Methodology
15
Glossary
© 2026 Prime Therapeutics LLC. Prime Therapeutics 2026 Medicaid Pharmacy Trend Report™ is published in conjunction with D Custom. All rights reserved. All brand names are property of their respective owners. The content — including text, graphics, images and information obtained from third parties, licensors and other material (“content”) — is for informational purposes only. The content is not intended to be a substitute for professional medical advice, diagnosis or treatment. Figures may be reprinted with the following citation: Prime Therapeutics Medicaid Pharmacy Trend Report™, Eleventh Edition, © 2026. Used with permission.
Introduction Prime Therapeutics is pleased to present the 11th edition of the Medicaid Pharmacy Trend Report (MTR), the industry’s leading report detailing trends in the Medicaid pharmacy Fee-for-Service (FFS) space. This annual publication highlights the drugs and classes driving trend, as well as those with the highest net spend. We also take a deeper look into the top 10 classes driving trend and highlight the most impactful drugs from each of those classes, with a continued focus on brand, generic, specialty and traditional drugs and their influence on overall pharmacy trend. This year, we saw the overall net drug trend increase by double digits (12.4%) for the second year in a row; fortunately,
We believe the insights in this report will help drive meaningful discussions and uncover strategic opportunities for managing Medicaid pharmacy programs now and in the months and years ahead.
that increase was 1.2 percentage points lower than last year’s 13.6% growth rate. Gross drug spend accelerated to 7.0% in 2025, up 2.8 percentage points from 4.2% in 2024. Federal rebates — the mandatory discounts manufacturers are required to pay in exchange for Medicaid drug coverage — continued to decline, falling 2.5 percentage points to 41.0% in 2025. On the heels of last year’s 4.7-percentagepoint decline, this continued decrease should be concerning to states and is clearly reflected in the double-digit net cost growth trend.
As the Medicaid prescription drug landscape continues to evolve, the MTR captures industry changes by analyzing millions of pharmacy claims and billions of dollars from states across the country. Our analysis brings into focus emerging trends at both the macro and micro levels, giving the reader a detailed view of not only where the Medicaid pharmacy program stands but also where it’s heading.
21 state Medicaid programs for which two consecutive years of complete data is available. In last year’s report, the 2024 data (comparing 2023 versus 2024) included data from 22 states. As a result, comparisons between reports may show small differences, which we note where appropriate. We hope you enjoy the 11th edition of the MTR.
Finally, a note for our readers: For this year’s analysis, we compare data across
Top-line figures 2025*
21
Medicaid FFS programs
-0.3%
claim volume comparison
$5.5B
in federal rebates (+0.7%)
$11.85
$68.9M claims (-0.3%)
in supplemental rebates (+7.3%)
$10.07
$12.4B
$402M
gross spend per claim
net spend per claim
in drug spend (+6.6%)
$1.0B
in rebate offset (+1.2%)
Compared to 2024 *See Page 14 for complete methodology.
2026 MEDICAID PHARMACY TREND REPORT
1
Medicaid Fee-for-Service trends and insights Net cost per claim 2024–2025 Figure 2
Gross cost per claim 2024–2025 Figure 1
Key findings
2024
In 2025, gross cost per claim rose 7.0% ($11.85), while net cost per claim rose 12.4% ($10.07) compared to last year’s trend of 4.2% ($6.86) and 13.6% ($9.78) for gross and net cost per claim, respectively. This year-over-year, double-digit increase in net cost per claim was similar to last year’s and well above 2023’s net cost increase of 6.9%. The net cost increase drivers, which we highlighted last year, remain the same: an average federal rebate decline linked to inflation, the average manufacturer price (AMP) cap repeal and the Medicare Drug Price Negotiation Program.
2025
% change
2024
Average
6.6%
6.2%
7.7%
7.4%
$174.52
$179.10
$185.14
$163.66
$168.58
Q1
Q2
7.0%
12.1%
14.1%
11.1%
$183.93
$86.10
$89.93
$94.97
$95.25
$171.90
$171.19
$76.76
$80.23
$83.27
$85.76
Q3
Q4
Q1
Q2
Q3
Q4
2025 net/gross cost per claim trend
50%
29.0%
4.4% 1.8% 2017
2
6.8% 7.4% 2018
12.4% Overall net trend
47.6%
31.0%
7.0%
48.9%
34.4%
37.7%
12.4% Overall net trend
2021
2022
2023
-$0.27 Cost trend Utilization
0.4% trend
22.4%
$101.93 Cost trend
Brand trend
-5.0% trend
8.3%
11.1% 2020
Generic trend
Utilization
41.9%
19.6%
2019
-1.1%
73.6% 12.4%
40.7%
10%
12.4%
Overall net spend trend: generic vs. brand and traditional vs. specialty Figure 4
61.2%
11.1%
$91.55 $81.48 12.2%
70%
20.0%
Average
$168.80
Cumulative gross cost/claim increase
30%
% change
$180.66
Historical gross and net cost per claim trend Figure 3 Cumulative net cost/claim increase
2025
2024
2025
Traditional trend
$2.94 Cost trend Utilization
-0.4% trend
7.6%
$251.07 Cost trend
Specialty trend
7.0% trend
Utilization
Top 5 classes by net spend Figure 5
Traditional vs. specialty impact
The top drug classes in Medicaid programs across the country remained unchanged from previous years. However, the cytokine and cell adhesion molecule (CAM) antagonists class experienced a $63M increase in net spend over the period, which moved it up two spots to No. 2, behind antipsychotics. Out of the top 10 specialty drugs increasing drug trend (see Figure 18), three of them were in the cytokine and CAM antagonists class. Despite falling to fourth, HIV/AIDS continues to see net spend growth, but at a slower rate than cytokine and CAM antagonists. Overall, the top five classes represented 35.3% of total net spend, down 0.6 percentage points from 2024.
8.8%
The 21 states in this year’s report saw similar growth trends to last year, when we included 22 states in this evaluation. Specialty claim volume increased from 1.4% to 1.5% in 2025. The total net cost associated with specialty drugs, as a percentage of total net spend, increased by 1.6 percentage points, from 57.0% to 58.6%.
Claims volume Figure 6 Traditional
Specialty
1.5%
1.4%
7.4%
2024
2025
98.6%
98.5%
7.1% 2024
6.6% 6.0%
Total net cost Figure 7 Traditional
Antipsychotics Cytokine and CAM antagonists
8.6%
Hemophilia treatments
All other
6.9% 43.0%
6.9%
HIV/AIDS Anticonvulsants
Specialty
64.7%
2025
2024
6.8% 6.1%
41.4%
57.0%
2025 58.6%
*See Page 9 for top 50 drug classes by net spend.
2026 MEDICAID PHARMACY TREND REPORT
3
Federal rebate update As we observed last year, federal rebate percentages continue to decline, driven largely by traditional branded drugs and, to a lesser extent, specialty products. Key contributing factors include inflation remaining above historical norms (see Figure 8), the repeal of the AMP cap, and the implementation of Medicare Drug Price Negotiation Program provisions under the Inflation Reduction Act (IRA). These dynamics have implications for the Medicaid Drug Rebate Program (MDRP) through changes to best price and IRA inflation penalties, which, like Medicaid, punish a manufacturer for raising its prices
This year marks the second-largest decline in federal rebates we’ve seen in the 11-year history of the MTR — 2.5 percentage points — following last year’s unprecedented 4.7-percentage-point decline, inclusive of the rebate offset amount (ROA).
Annual change in December CPI-U Figure 8 8.0%
6.0%
4.0%
2.0%
2012
4
2014
2016
2018
2020
2022
2024
2026
faster than the rate of inflation. As a result, manufacturers will likely launch new drugs with higher list prices and then take inflation-adjusted price increases over time. This ultimately lowers federal Medicaid rebates by reducing the impact of the Consumer Price Index for All Urban Consumers (CPI-U) penalty. This year, the decline in federal rebates was again driven by branded, traditional drugs rather than specialty drugs. Rebates for branded, traditional drugs fell 3.5 and 3.3 percentage points, respectively, while specialty drugs fell 1.2 percentage points (see Figure 10). Bearing in mind that new-to-market drugs start with a federal rebate of 23.1% of AMP, higher utilization of newer products is likely weighing down the average federal rebate for both traditional and specialty drugs. Across the 21 states included in this analysis, supplemental rebates — which provide states price protection to help offset declining federal rebates — rose slightly to 8.3% of total net spend, compared with 8.2% last year. However, not all drugs benefit from supplemental rebate protection when federal rebates decline. This dynamic is due to the inverse relationship between federal and supplemental rebates under guaranteed net-unit-price contracts, which are common in Medicaid. Under these agreements, a decrease in federal rebates is offset by a corresponding increase in supplemental rebates, and vice versa. Supplemental rebates are layered on top of mandatory federal rebates. However, not all drugs are price protected by supplemental rebates, and when federal rebates decline, the net cost of those drugs increases. Despite increasing supplemental rebates over the period, the combined Medicaid rebate (federal, supplemental and ROA) totaled 49.3% this year, representing a 2.4-percentage-point decline from the prior year and resulting in overall higher net costs for states.
Federal rebate percentage by segment Figure 9 The average federal rebate can be subdivided as either specialty and traditional drugs or brand and generic drugs.
Percentage-point change in federal rebate (net of ROA), 2024 vs. 2025 Figure 10 Similar to the change seen from 2023 to 2024, the primary drivers of the decrease in the federal rebate were traditional and brand-name drugs, not specialty drugs.
Specialty 36.8%
2024
2025
Brand 52.7% 2022
Brand 49.2%
Federal rebate*^ 43.5%
Traditional 56.3%
Specialty 35.6%
Generic 9.9%
Federal rebate* 41.0%
Generic 10.1%
Brand
-3.5%
Traditional 52.9%
Specialty
-1.2%
Federal rebate*
-2.5%
Significant change from last year
Traditional
-3.3%
Generic
0.2%
*Federal rebate as a percent of pharmacy reimbursement and net of ROA ^The 21 states in this year’s report saw similar trends to last year, when we included 22 states in this evaluation.
2026 MEDICAID PHARMACY TREND REPORT
5
FEDE R A L R E BAT E U P DAT E
A historical look at the federal rebate trend In the chart to the right, we show the federal rebate, net of ROA, for all 11 years of the MTR. We also calculate the yearly percentage-point change from the previous year to highlight the dramatic decline seen in 2024, which, as predicted in last year’s report, continued its steep decline in 2025. As we discussed in detail last year, we believe average federal rebate decline is linked to several factors, including inflation, AMP cap repeal and Medicare drug price negotiations. Last year, based on the trend we saw in average federal rebates, we estimated the 2025 federal rebate (net of ROA) to be between 41.5% and 43.8%. This year’s report shows that states received an average federal rebate of 41.0%, which is even lower than predicted. Using the historical trend with regression-based projection for 2026, we anticipate federal rebates to land near 37% next year. If this were to materialize, state Medicaid programs will have experienced an almost 20-percentage-point decline in federal rebates over the nine-year period from 2018 (55%) to 2026 (37%).
6
Medicaid federal rebate trend Figure 11 Federal rebate percentage net of ROA
Poly regression 2015–2025
2026 projection
60.0% 57.5% 55.0% 52.5% 50.0% 47.5% 45.0% 42.5%
40.0% 37.5%
37.0% 35.0% 2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
AMP cap repeal impact
Pharmacy pipeline
Effective Jan. 1, 2024, the American Rescue Plan Act eliminated the Medicaid drug rebate cap to increase Medicaid rebate collections and discourage drug price increases that exceed the rate of inflation. In 2025, we continued to see manufacturers take nontraditional pricing actions to manage rebate liability and avoid paying more in rebate than 100% of AMP.
In this unique watch list, we’ve identified notable agents still awaiting approval. These products have the potential to make significant clinical and financial impacts, and their development status is being tracked on the Prime Therapeutics Quarterly Drug Pipeline radar. We’ve displayed these pipeline products and their respective classes or proposed indications, as well as an estimated financial forecast for the year 2030. The financials are projected total annual U.S. sales, reported in millions.
Key manufacturer approaches included lowering list prices to reduce both the base federal rebate and CPI-U inflation penalties and, in some cases, discontinuing their drugs altogether. These pricing actions lower gross spend, which lowers federal rebate, but, in many cases, increases a state’s net spend for these drugs.
Traditional
Specialty
apitegromab Neurology
zidesamtinib
$510
asundexian
Cardiovascular
Oncology
$822
$541
zanzalintinib
bezuclastinib
$1,019
$1,696
Oncology
Background information on the AMP cap repeal is detailed in the 2025 Medicaid Pharmacy Trend Report.
Oncology
cagrilintide/ semaglutide
ulixacaltamide
Endocrine
Neurology
$5,299
$1,830
tinlarebant
giredestrant
$920
$486
Ophthalmology
Oncology
ianalumab
rebisufligene etisparvovec
Immunology
$1,065
Metabolic/Gene therapy
$72
psilocybin (COMP360)
Behavioral health
$844
lorundrostat neladalkib Oncology
Cardiovascular
$774
$725
2026 MEDICAID PHARMACY TREND REPORT
7
Class and drug trends
Traditional
Specialty
Therapeutics class net dollar impact
Drug net dollar impact
Similar to last year, four of the five classes driving trend are traditional drug classes. Those classes continue to drive the increase in net trend, while specialty classes, to some degree, acted as a counterweight to that growth. Weight management agents had the greatest impact on net trend, driving $1.50 ($0.68) of the $10.07 net cost trend in 2025. Cytokine and CAM antagonists drove an additional $0.94, a slightly lower increase than the $1.03 in 2024.
The top 20 specialty and traditional drugs by total net spend accounted for 30% of overall net drug spend. The top five specialty drugs were unchanged from last year, although their ranking shifted. Among traditional drugs, the top 10 included three newly listed therapies used for diabetes and weight loss, bringing the total number of drugs in these classes to four. Together, these diabetes and weight loss therapies accounted for nearly 4.6% of total net spend and 15% of the net dollar impact on trend.
Traditional drug impact Traditional classes driving net spend in 2025 include glucagon-like peptide-1 (GLP-1) therapies, represented in both the weight management and hypoglycemics, incretin mimetics/enhancers categories. These agents continue to drive accelerated growth in Medicaid drug costs. Under the MDRP, states must cover nearly all FDA-approved drugs for medically accepted indications, including GLP-1s for type 2 diabetes and cardiovascular conditions, while coverage for weight management remains limited to a small number of states. Despite these restrictions, net spend increased by $103M, with both net spend and claim volume growing more than 135% during the period.
Top 5 Medicaid classes increasing total net spend by dollar impact Figure 12
2025 top 10 specialty drugs by percentage of net spend Figure 13 3.54%
2.62% 1.91%
1.19%
1.11%
Biktarvy Trikafta Hemlibra Dupixent Stelara Skyrizi Evrysdi (oral) tablet (SQ) pen (SQ) syringe pen (SQ) (oral) (oral) (SQ)
1.76% $0.94
8
1.59%
0.91%
0.78%
0.74%
Altuviiio Ingrezza Sublocade (IV) (oral) (SQ)
2025 top 10 traditional drugs by percentage of net spend Figure 14
$1.50
Weight management agents
3.48%
Cytokine and CAM antagonists
$0.91
Hypoglycemics, incretin mimetics/ enhancers
$0.74
Anticonvulsants
$0.70
Antipsychotics
1.73% 1.37%
1.36%
1.09%
0.98%
0.96%
0.94%
0.87%
0.87%
Vraylar Zepbound Epidiolex Invega Mounjaro Vyvanse Suboxone Ozempic Abilify Mavyret capsule film (SL) (SQ) Maintena (oral) (oral) pen (SQ) Sustenna (SQ) (oral) (oral) (IM) (IM)
Top 50 Medicaid drug classes by net spend Figure 15 Rank 2025
Rank 2024
1
1
2
Traditional
% of total net spend 2025
% of total net spend 2024
Rank 2025
Rank 2024
Class
% of total net spend 2025
% of total net spend 2024
Antipsychotics
8.56%
8.76%
26
28
Multiple sclerosis agents
0.73%
0.67%
4
Cytokine and CAM antagonists
6.92%
6.62%
27
29
Rett syndrome
0.72%
0.66%
3
3
Hemophilia treatment
6.85%
7.06%
28
23
Bronchodilators, beta agonist
0.67%
0.80%
4
2
HIV/AIDS
6.83%
7.43%
29
32
HAE treatments
0.65%
0.59%
5
5
Anticonvulsants
6.12%
5.97%
30
30
Immune globulins
0.63%
0.64%
6
6
Cystic fibrosis, oral
4.71%
4.89%
31
27
Angiotensin modulators
0.62%
0.72%
7
7
Stimulants and related agents
4.31%
4.54%
32
36
Antimigraine agents, other
0.59%
0.55%
8
9
Immunomodulators, atopic dermatitis
3.00%
2.68%
33
54
Bile salts
0.52%
0.32%
9
15
Weight management agents
2.84%
1.35%
34
31
Oncology, oral - renal cell
0.52%
0.62%
10
8
Opiate dependence treatments
2.77%
3.15%
35
35
Proton pump inhibitors
0.47%
0.57%
11
10
2.69%
1.90%
36
37
Antihistamines, minimally sedating
0.46%
0.53%
12
11
2.24%
1.76%
37
33
NSAIDs
0.43%
0.59%
13
13
Antidepressants, other
1.80%
1.66%
38
42
Anxiolytics
0.42%
0.45%
14
14
Oncology, oral - breast
1.44%
1.49%
39
52
Growth hormone
0.42%
0.33%
15
19
Oncology, oral - hematologic
1.40%
1.21%
40
41
Oncology, oral - lung
0.40%
0.48%
16
18
Movement disorders
1.37%
1.29%
41
49
Oncology, oral - prostate
0.40%
0.37%
42
34
Hypoglycemics, insulin and related agents
0.40%
0.59%
Class
Hypoglycemics, incretin mimetics/ enhancers Duchenne muscular dystrophy treatments
Rank change
17
12
Spinal muscular atrophy
1.35%
1.68%
18
17
Glucocorticoids, inhaled
1.18%
1.32%
43
38
Skeletal muscle relaxants
0.36%
0.49%
19
16
Hepatitis C agents
1.17%
1.32%
44
46
Analgesics, narcotics short
0.36%
0.40%
20
22
Oncology, oral - other
1.14%
0.91%
45
45
Lipotropics, statins
0.34%
0.41%
21
24
Immunomodulators, asthma
0.90%
0.79%
46
44
Penicillins
0.33%
0.42%
22
20
Antidepressants, SSRIs
0.90%
1.04%
47
48
Laxatives and cathartics
0.33%
0.38%
23
21
Neuropathic pain and select agents
0.82%
0.91%
48
47
Antihistamines, first generation
0.32%
0.39%
24
25
PAH agents, oral and inhaled
0.77%
0.77%
49
57
Immunosuppressives, oral
0.31%
0.30%
25
26
Mucopolysaccharidosis
0.73%
0.76%
50
51
Antiemetic/antivertigo agents
0.30%
0.33%
Specialty Rank change
2026 MEDICAID PHARMACY TREND REPORT
9
CLAS S A N D D RU G T RE N D S
2025 top 10 traditional and specialty drugs driving trend Traditional
Top 10 traditional drugs increasing drug trend Figure 16
Specialty
Top 10 specialty drugs increasing drug trend Figure 18
$1.01
$0.39 $0.33 $0.41
$0.39
$0.36 $0.21
Zepbound Mounjaro pen (SQ) (SQ)
Januvia (oral)
Wegovy (SQ)
Spiriva (INH)
$0.17
$0.16
Caplyta (oral)
Valtoco (nasal)
$0.13
$0.12
Trulicity (SQ)
Cobenfy Amphetamine (oral) salt combo ER (oral)
Ozempic (SQ)
Paxlovid Suboxone film (SL) tab dose pack (oral)
Linzess (oral)
-$0.08
Dupixent pen (SQ)
-$0.06
Farxiga (oral)
Focalin XR (oral)
Oxbryta (oral)
-$0.20 -$0.24 -$0.24
10
-$0.15
Altuviiio (IV)
Duvyzat Skyrizi suspension on-body (oral) (SQ)
Zolgensma (IV)
Stelara syringe (SQ)
Ravicti (oral)
-$0.18
-$0.16
-$0.15
-$0.04 -$0.04 -$0.23
-$0.15
$0.27
$0.26
$0.25
$0.22
$0.21
$0.20
Alyftrek tablet (oral)
Strensiq
Spravato (nasal)
Austedo XR (oral)
Advate (IV)
Vigabatrin Spinraza (IT) powder pack (oral)
Hizentra vial (SQ)
Triumeq (oral)
-$0.08
-$0.07
-$0.07
-$0.07
-$0.06
Bimzelx pen (SQ)
Skyrizi pen (SQ)
Top 10 specialty drugs decreasing trend Figure 19
Jardiance Symbicort Chlorzox(oral) (INH) azone (oral)
-$0.07
$0.27
$0.12
Top 10 traditional drugs decreasing trend Figure 17 Adderall XD (oral)
$0.33
Eloctate (IV)
-$0.13
Top 10 therapeutic classes driving net trend Traditional
Figure 20 Overall, the top 10 therapeutic classes driving net spend consist of a mix of traditional and specialty drug classes. Established traditional classes, such as anticonvulsants and antipsychotics, consistently rank in this group, partly due to the characteristics of the Medicaid population. At the same time, there are newer, higher-cost oral, nasal and injectable therapies being introduced in these classes. As new therapies emerge for rare conditions, including treatments for Duchenne muscular dystrophy and hemophilia, the combination of significant unmet need and highcost treatments is expected to drive increased net spend. Similarly, long established classes, such as atopic dermatitis, are experiencing sustained growth as treatments shift away from lower-cost options and toward newer long-term maintenance therapies. The impact of weight management agents was significant during the period, driving $1.50 of the $10.07 total increase in net drug spend. Despite state restrictions on access, both total net spend and claim volume increased by more than 135%. Future analyses will continue to assess the evolving trends and growth within this class.
Specialty
Therapy class
Top drug
Net dollar impact
Net spend trend
Change in total net spend
Change in claim volume
Change in net cost per claim
1
Weight management agents
Zepbound pen (SQ)
$1.50
$103.1M
135.7%
139.3%
-1.5%
2
Cytokine and CAM antagonists
Skyrizi on-body (SQ)
$0.94
$63.4M
17.0%
1.4%
15.4%
3
Hypoglycemics, incretin mimetics/enhancers
Mounjaro (SQ)
$0.91
$62.6M
58.6%
-6.2%
69.1%
4
Anticonvulsants
Fintepla (oral)
$0.74
$49.9M
14.8%
0.0%
14.8%
5
Antipsychotics
Caplyta (oral)
$0.70
$46.5M
9.4%
1.3%
8.0%
6
Duchenne muscular dystrophy treatments
Duvyzat suspension (oral)
$0.62
$42.6M
43.1%
16.4%
22.9%
7
Immunomodulators, atopic dermatitis
Dupixent pen (SQ)
$0.56
$38.3M
25.4%
18.3%
6.0%
8
Hemophilia treatment
Altuviiio (IV)
$0.52
$34.7M
8.7%
-7.2%
17.2%
9
Cystic fibrosis, oral
Alyftrek tablet (oral)
$0.33
$21.9M
8.0%
4.4%
3.4%
10
Oncology, oral - other
Voranigo (oral)
$0.30
$20.7M
40.4%
8.8%
29.1%
2026 MEDICAID PHARMACY TREND REPORT
11
Key points of Medicaid economics
Net drug cost is calculated net of federal, supplemental and rebate offset amounts.
Brand drugs can be less expensive than their generic equivalents and can save states millions of dollars annually.
Federal rebates and net cost per claim have an inverse relationship. Declining federal rebates drive higher net cost for states. States do not chase supplemental rebates at the expense of their lowest net cost or federal rebates.
States subtract ROA from the federal rebate when calculating net cost of drugs.
12
Medicaid pharmacy economics Medicaid pharmacy pricing principles have remained largely unchanged over the 11 years Prime Therapeutics has produced this report. The fundamentals of the pharmacy program are the same: Manufacturers sign the National Drug Rebate Agreement with the Department of Health and Human Services (HHS) to participate in the MDRP, where they agree to pay a mandatory, or “federal,” rebate in exchange for required pharmacy coverage with or without utilization management or prior authorization. All states, the District of Columbia and select territories (referred to as “states”) currently offer this benefit to Medicaid recipients. As a result, all manufacturers’ products are covered through this agreement with HHS. Medicaid rules also permit states to contract for additional, or “supplemental,” rebates by individual states or a group of states to further reduce the net cost of pharmaceuticals. These contracts are exempt from Medicaid’s best price, which means these rebates do not impact the manufacturer’s Medicaid rebate calculation. The pharmacy benefit is included in the Federal Medical Assistance Percentage, so states share supplemental rebates as they do federal rebates with the federal government. Beyond the mandatory rebate and best price, two other calculations impact the total rebate amount paid by manufacturers to determine a drug’s net cost: the ROA and the CPI-U penalty. The ROA is that part of the federal rebate that goes entirely to the federal government. It comprises a small portion of the total rebate: roughly 3.2% of total drug spend in 2025. In 2025, the average total discount inclusive of ROA was 49.3% (44.3% federal and 8.3% supplemental). The CPI-U penalty is added to the base rebate calculation to mitigate price increases on states. If a manufacturer raises its prices faster than the rate of inflation, that increase beyond CPI-U is added to the calculated federal rebate due; the inverse is also true.
Inflation, as mentioned in this report over the last several years, has been a key factor driving federal rates down. Spiking at 7% in 2021 and 6.5% in 2022, inflation has continued to decline but remains above recent historical averages (see Figure 8). As this year’s data demonstrates, lower federal rebates directly correlate to increased net cost per claim (see Figure 2). Supplemental rebates mitigate those increases, but those rebates are generally limited to preferred drugs on a state preferred drug list.
The economics To understand Medicaid economics at the drug level, depicted in Figure 21, assume pharmacy reimbursement, wholesale acquisition cost (WAC) and AMP are all the same. A new brand drug enters the market with a minimum mandatory rebate of 23.1% of AMP. This drug enters a competitive class with three clinically equivalent therapeutic alternatives, each with higher discounts and lower net costs than the new drug. With a pharmacy reimbursement cost of $100, the net cost to the state is $76.90 ($100 minus $23.10, or 23.1%). To be competitive, the manufacturer of the new brand will offer an additional discount, known in Medicaid as a “supplemental rebate,” to lower the net cost from $76.90 to a competitive price of $50. The value of the supplemental rebate at time zero is thus equal to $26.90 and the total discount is 50%, or $50. As time progresses, manufacturer pricing actions drive the total discounts up. Still, due to the inverse relationship between supplemental and federal rebates, supplemental discounts decline over time as the total federal discount increases. As the patent expiration approaches, the manufacturer generally increases the cost of the drug and the CPI-U penalty accelerates the growth of the federal rebate in the quarters just prior to that event.
Generic impact For Medicaid, states typically delay preferring the generic until after the six-month exclusivity period and the entry of multiple generics into the market. Initially, generics enter the market at a discounted price compared to the brand’s full WAC and have a federal rebate of 13% of AMP. The net cost of a brand drug can be significantly lower than that of the generic during this period. When the generic’s net cost becomes lower than the brand’s, the state will prefer the generic and accrue additional savings.
This nuance underscores the importance of considering net costs, as brands with high federal rebates can be more cost-effective than generic drugs in certain cases. In 2025, 17 of the 21 states included in this report saved $314M, or $76.30 per claim, preferring brand over generic equivalents. The states’ top five brand-over-generic drugs were Symbicort, Farxiga, Suboxone, Restasis and Spiriva, which accounted for 66.3% of total brand-over-generic savings in 2025.
Medicaid pharmacy economics Figure 21
Generic drug price
Brand drug price
$100.00
State net drug cost
$50.00
Supplemental rebate
State net drug cost
$23.10
Brand federal rebate Greater of (23.1% AMP or AMP – best price) + CPI-U penalty New drug introduction
Time
Generic federal rebate 13.0% AMP + CPI-U penalty Patent expiration/ generic introduction
2026 MEDICAID PHARMACY TREND REPORT 13
Methodology The Prime Therapeutics Medicaid Pharmacy Trend Report focuses exclusively on the Medicaid FFS drug spend for Prime Therapeutics customers (highlighted in color below) and does not include managed care utilization. It provides a comprehensive year-overyear analysis of Medicaid FFS pharmacy claims data on a cost-per-claim basis.
• Data was obtained from 21 Medicaid FFS clients across the country from which two years of complete FFS data are available. Claims data used in this report is publicly available on the CMS website. • To achieve the highest level of accuracy for the Medicaid FFS space, this report again incorporates the CMS federal rebate data for both 2024 and 2025. Federal rebate data at the drug level is confidential and protected by federal law under the Social Security Act at 42 U.S.C. 1396r-8 (b)(3)(d). Therefore, this report does not disclose net cost pricing information on a per-drug basis.
• The report trends are based on a gross cost and net cost-per-claim basis and compared the 2024 calendar-year data to the 2025 calendar-year data. • The dataset used in this evaluation contains more than 68.9M claims, with a gross cost of $12.4B and a net cost of $6.3B.
ME
WA MT
ND
VT
MN OR
ID
NH WI
SD
NY
MI
WY PA
IA NE IL
NV
UT
CO
OH
IN
WV WV KS
MO
VA VA
KY
CA
MA RI CT NJ DE MD DC
NC TN OK AZ
AR
SC
NM MS
AL
GA
LA
TX
FL AK
HI
Prime Therapeutics customer data used in analysis
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Glossary AMP.....................................................................................................................................average manufacturer price
IRA....................................................................................................................................................Inflation Reduction Act
CAM................................................................................................................................................. cell adhesion molecule
IT......................................................................................................................................................................................intrathecal
CMS................................................................................................. Centers for Medicare & Medicaid Services
IV...................................................................................................................................................................................intravenous
CPI-U..................................................................................Consumer Price Index for All Urban Consumers
MDRP....................................................................................................................... Medicaid Drug Rebate Program
ER/XR......................................................................................................................................................... extended release
NSAIDs...................................................................................................... nonsteroidal anti-inflammatory drugs
FDA................................................................................................................................ Food and Drug Administration
PAH...........................................................................................................................pulmonary arterial hypertension
FFS....................................................................................................................................................................Fee-for-Service
ROA..................................................................................................................................................... rebate offset amount
GLP-1........................................................................................................................................... glucagon-like peptide-1
SL.....................................................................................................................................................................................sublingual
HAE................................................................................................................................................ hereditary angioedema
SSRIs....................................................................................................... selective serotonin reuptake inhibitors
HHS................................................................................................. Department of Health and Human Services
SQ.......................................................................................................................................................................... subcutaneous
HIV/AIDS................. human immunodeficiency virus/acquired immunodeficiency syndrome
WAC........................................................................................................................................ wholesale acquisition cost
IM.............................................................................................................................................................................intramuscular INH............................................................................................................................................................... inhaled/inhalation
2026 MEDICAID PHARMACY TREND REPORT 15
CPR_EXT_302650-A 09/26 © 2026 Prime Therapeutics LLC