Preferred drug lists: potential impact on healthcare economics

Abstract

Objectives: To analyze the implementation of Medicaid preferred drug lists (PDLs) in a number of states and determine its impact on quality of care and cost relative to other segments of healthcare.

Methods: We reviewed research and case studies found by searching library databases, primarily MEDLINE and EBSCOHost, and searching pertinent journals. Keywords initially included "drug lists," "prior authorization," "prior approval," and "Medicaid." We added terms such as "influence use of other healthcare services," "quality of care," and "overall economic impact." We mainly used primary sources.

Results: Based on our literature review, we determined that there are a number of issues regarding Medicaid PDLs that need to be addressed. Some issues include: (a) the potential for PDLs to influence the utilization of other healthcare services, (b) criteria used by Medicaid for determining acceptance of drugs onto a PDL, (c) the effect of PDL implementation on compliance to new regimens, (d) the potential effects of restricting medication availability on quality of care, (e) administrative costs associated with PDLs, and (f) satisfaction rates among patients and medical providers. This review highlighted expected short-term cost savings with limited degree of compromised quality of PDL implementation, but raised the concern about the potential long-term decline in quality of care and overall economic impact.

Conclusions: The number of concerns raised indicates that further studies are warranted regarding both short-term cost benefits as well as potential long-term effects of Medicaid PDL implementation. Objective analysis of these effects is necessary to ensure cost-effectiveness and quality of care.

Figure 1

The economic impact of coronary heart disease in the United States (AHA 2000).

Figure 2

Illustration of the approximate cost of each segment in the health field expressed as a percentage of the nation’s health dollar (Health Care Financing Administration 2004). ¹Includes dental services, other professional services, home health, durable medical products, over-the-counter medicines and sundries, public health, research and construction.

Figure 3

The estimated cost of stroke in the United States (AHA 2000).