This past March, the Food and Drug Administration (FDA) recently announced a long-awaited decision to approve one product of the overdose-reversal medication, naloxone (Narcan), for over-the-counter (OTC), nonprescription use. NHeLP has joined advocates for the rights of people who use drugs and individuals with opioid use disorders celebrating the move because it will facilitate access to a medication that is highly effective in preventing overdose deaths, presents low risk of misuse, and is easy to administer by both individuals at risk of overdose and bystanders.
We caution, however, that while making this naloxone product an OTC medication allows individuals to access the medication without having to visit a provider for a prescription, there may be unintended consequences regarding insurance coverage. Under the Medicaid prescription drug benefit, all states provide coverage for naloxone as an outpatient prescription drug. In addition, under federal law, most private plans in the individual and small-group markets, as well as Alternative Benefit Plans for Medicaid expansion populations, must provide coverage for naloxone as part of the Essential Health Benefits (EHB) package. Many state laws also require coverage of naloxone in state-regulated plans. The problem is that many of these coverage requirements are specific to “prescription drugs” and, as such, coverage of OTC naloxone may not happen automatically.
After the FDA’s decision, there are several factors states should consider in order to ensure that naloxone maintains its status as a covered medication under both Medicaid and private non-grandfathered plans now that the medication may be accessed without a prescription. These are outlined below.
The Medicaid Act allows states to cover outpatient OTC (i.e., nonprescription) drugs as part of their pharmacy benefit. States should ensure that they have selected coverage for OTC drugs in their Medicaid State Plans because otherwise, those drugs are typically excluded from coverage. Most states that have already elected to cover OTC drugs do not need an additional state plan amendment to add naloxone since the State Plan already authorizes coverage for the OTC drugs the state specifies administratively. To effectuate coverage of OTC naloxone, Medicaid agencies may need to actively incorporate naloxone into their covered OTC drug list.
In addition, under federal law, for beneficiaries to receive coverage for OTC drugs under the pharmacy benefit, beneficiaries are required to obtain a prescription for the particular OTC drug. While this requirement may seem to defeat the purpose of the OTC status, states can circumvent the need for beneficiaries to visit a provider for a prescription by issuing standing orders for OTC medications. Standing orders are generalized prescriptions signed by an authorized state official that allow individuals named in the order to access the medication without an individualized prescription.
Naloxone standing orders already exist in most states and many standing orders allow any individual in the state, including family members and friends of people at risk of overdose, to access naloxone without a prescription. Before the move to OTC, standing orders ensured that individuals were able to skip an extra visit to a prescriber and access naloxone directly from pharmacists. For the specific naloxone product that will now be available OTC, these orders may not seem necessary anymore. However, because of the legal requirement that Medicaid only cover OTC drugs with a valid prescription, standing orders are still essential for ensuring that Medicaid beneficiaries continue to have access to the medication.
States should thus ensure they have a standing order in place that applies to any individual seeking naloxone for themselves or for a friend or family member. This includes states, like California, that already have laws that allow individuals to access naloxone directly from pharmacists without a prescription since such state laws do not satisfy the Medicaid requirement that individuals have a prescription for a covered OTC drug.
In general, private plans that are required to cover EHBs must cover at least one drug in each class and category of the U.S. Pharmacopeia (U.S.P.) drug classification system. Under that framework, naloxone coverage is required because naloxone happens to be the only drug in its class and category. (Under the Affordable Care Act, non-grandfathered individual and small group market plans, including plans sold on the Marketplaces, are subject to the EHB requirement.) The U.S.P. includes both prescription medications and OTC drugs. This means that naloxone (including Narcan) is likely to remain on the list (and thus, plans will continue to be required to cover it) regardless of whether it is obtained OTC or through a prescription. Moreover, the U.S.P. is updated once every three years and the last update took place earlier in 2023. As such, barring changes to federal regulations on EHB prescription drug coverage, plans would be required to cover naloxone, both prescribed and OTC, at least until 2026.
Despite the fact that naloxone will likely remain in the U.S.P. for the foreseeable future, plans may seek to limit coverage of OTC naloxone to instances when the medication has been prescribed under the argument that the EHB category extends specifically to prescription medications. While the scope of the EHB medication benefit with respect to nonprescription drugs is far from settled, states should consider issuing or expanding naloxone standing orders in order to sidestep this potential barrier. As with Medicaid, the standing order should extend to every individual in the state.
States concerned with the possibility that OTC naloxone will be excluded from coverage may rush into enacting laws that require private plans to cover OTC naloxone. When done outside of the EHB benchmarking process, however, such a requirement may be considered a state mandate in addition to EHB that forces the state to defray the cost of providing the medication. HHS has not issued extensive guidance on defrayal, and states generally have considerable leeway to determine what mandates are subject to defrayal. Nonetheless, HHS has urged states to add new coverage requirement through the benchmarking process in order to avoid defrayal, particularly for services related to the overdose epidemic. Given the risk of defrayal combined with the likelihood that plans will be required to continue covering naloxone for the foreseeable future, states should exercise extreme caution when considering new state mandates for OTC naloxone via legislation or other similar state action.
The FDA’s decision to make one naloxone product available OTC will undoubtedly save countless lives currently at risk of an opioid overdose. It may also lead to some confusion about whether OTC naloxone will continue to be covered by health coverage programs and insurers. Fortunately, states have tools at their disposal to ensure continuity of coverage both under Medicaid and in the majority of private plans in the individual and small-group markets. The fight to reduce overdose deaths secured a huge win with OTC naloxone…it now moves on to ensuring continuous coverage and affordability of this live-saving medication.