This report explores the fiscal and programmatic impacts that a switch to a prescription drug carve-out model, where the pharmacy benefit would be managed under a single-payer system within Medicaid using the fee-for-service payment methodology, would have on Virginia’s Medicaid program (Cardinal Care). Our key recommendations for the Medicaid program include preserving the current pharmacy carve-in, preserving the common core formulary (i.e., the preferred drug list), enhancing reimbursements to critical access pharmacies, increasing MCO policymaking representation, and exploring potential revisions to capitation rates for the pharmacy component.