Drug coverage is an important facet of the Medicaid program. Although it is an optional benefit, all states cover outpatient prescription drugs in their Medicaid programs. States have significantly more leeway, however, in whether they cover over-the-counter (OTC) drugs. This Fact Sheet provides an overview of Medicaid rules for OTC drug coverage and discusses a variety of state examples for Medicaid program coverage of OTC drugs. It was revised in February 2022.