Medicaid Prescription Drug Policy - Identifying Effective Drug Price Containment Methods

Health care expenditures are at an all-time high in the United States and continue to rise each year. Much of the financial burden is carried by the federal and state levels of government through public health programs such as Medicaid. A major contributor to the high cost of healthcare in the Medicaid program is high prescription costs. In order to effectively limit the rise in Medicaid spending, states utilize cost containment measures that surround prescription spending. The purpose of this literature review is to identify drug price cost containment measures for Medicaid state programs. Through use of a qualitative review, the study analyzed secondary quantitative and qualitative data. Findings revealed that there were common and unique cost containment measures among state Medicaid programs. Each state studied utilized a Drug Utilization Review (DUR), Preferred Drug List (PDL), and Prior Authorization (PA) measure. These measures proved to be effective and helped contain state prescription costs. The states of Ohio, Pennsylvania and Florida uniquely implemented a Unified Preferred Drug list. Out of the three states who utilized this measure, the Florida Medicaid program experienced an increase in prescription drug costs. The state of New York successfully implemented a Medicaid drug cap policy, which enabled it to negotiate for additional drug rebates. The West Virginia Medicaid program successfully carved out the prescription benefit and saved approximately $54.5 million in 2018. Further research will need to be completed on why not all fifty states use the same cost containment measures and reasons for lack of policy surrounding diseases with high prescription drug costs. If there is an agreement between states on which containment measures to use, it is possible that the federal and state Medicaid programs could see a substantial amount of savings. It would be a strategic move for the Federal Medicaid program to implement policy that includes additional cost containment measures.

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