Medicaid preferred drug lists' costs to physicians

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

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.

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.

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.

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.