The Centers for Medicare & Medicaid Services today approved for Oklahoma the first state Medicaid plan amendment to allow supplemental rebate agreements involving value-based purchasing arrangements with drug makers. The value-based agreements could produce extra rebates for the state if clinical outcomes are not achieved. “Oklahoma’s plan for value-based drug contracts is an important example of how states can innovate to bring down drug costs,” said Health and Human Services Secretary Alex Azar. In addition, CMS today approved an amendment to Massachusetts’ Section 1115(a) Medicaid demonstration, MassHealth, which permits the state to provide coverage to certain veterans and family members who receive income from state veteran annuities. Massachusetts also proposed a number of flexibilities which CMS did not approve but on which it continues to work with the state, including a request to exclude certain Medicaid-covered outpatient drugs through a closed formulary. In other news, CMS today sent a letter to states clarifying that drugs approved under section 506(c) of the Federal Food, Drug, and Cosmetic Act are covered outpatient drugs and must be covered by states consistent with the Medicaid Drug Rebate Program.