Medicaid preferred drug lists' costs to physicians

Abstract

Background: Medicaid preferred drug lists (PDLs) might reduce costs for Medicaid programs while creating costs to physicians.

Objectives: To measure the costs from complying with Medicaid PDLs for primary care physicians and cardiologists, and to quantify the costs of a hypothetical PDL for Medicare Part D.

Research design: We analyzed cardiologists' and primary care physicians' experiences with Medicaid PDLs for antihypertensives and statins in 9 states. Physicians' prescribing volumes and PDL compliance were generated by combining pharmacy claims data from Wolters Kluwer Health with the state PDLs. These data were augmented with a survey of physicians. A Monte Carlo simulation was used to randomly assign each relevant physician in the state to a survey response. Estimates of the cost of a potential Part D PDL relied on the volume of Part D claims reported by Centers for Medicare and Medicaid Services (CMS) through May 2006.

Results: Physicians' PDL-related costs averaged $8.02 [95% confidence interval (CI): $7.25-$8.78] per prescription. Average cost per prescription not covered by the PDL was $14.41 (95% CI: $13.29-$15.53), and average cost per prescription covered by the PDL was $6.59 (95% CI: $5.91-$7.28). Medicaid PDL costs per physician averaged $1110 (95% CI: $1061-$1161) annually for statins and antihypertensives alone, and this varied across states. Similar restrictions under Medicare Part D across all therapeutic classes would have cost physicians $3.18 billion (95% CI: $2.88-$3.49 billion) in 2006.

Conclusions: Medicaid PDLs generate considerable costs to physicians, as would adoption of PDLs in Medicare Part D. Policymakers should weigh these and other costs against the benefits of PDLs.