Medicaid preferred drug lists: a success story?

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.