Medicaid preferred drug lists: a success story?

Abstract

The evolution of preferred drug lists (PDLs) as policy mechanisms for reducing state Medicaid program drug spending has occurred with little or no foundation in research. An emerging body of evidence suggests that indirect and programmatic costs limit the effectiveness of PDLs as a cost-saving mechanism. This article evaluates program-reported savings and the evidence for increased indirect costs, and finds little to support the long-term viability of this cost-containment strategy. In addition, evidence is reviewed that makes a strong case that PDLs create a disproportionate burden for minorities and the impoverished. PDLs will gradually become indistinguishable from formularies, and will eventually face legal challenge as a consequence.

Keywords::

• drug cost
• Medicaid
• preferred drug list
• policy
• prior authorization

Financial & competing interests disclosure

The author has acted as a consultant with a large number of pharmaceutical firms, including one study cited in this article, as well as consultant work with organizations providing services to various state Medicaid programs, and testified to several state legislatures regarding this and related matters. The author serves on several pharmaceutical firms speaker bureaus and routinely receives honoraria when presenting. The author has no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

No writing assistance was utilized in the production of this manuscript.