An explanatory model for state Medicaid per capita prescription drug expenditures

Rising prescription drug expenditure is a growing concern for publicly funded drug benefit programs like Medicaid. To be able to contain drug expenditures in Medicaid, it is important that cause(s) for such increases are identified. This study attempts to establish an explanatory model for Medicaid prescription drugs expenditure based on the impacts of key influencers/predictors identified using a comprehensive framework of drug utilization. A modified Andersen's behavior model of health services utilization is employed to identify potential determinants of pharmaceutical expenditures in state Medicaid programs. Level of federal matching funds, access to primary care, severity of diseases, unemployment, and education levels were found to be key influencers of Medicaid prescription drug expenditure. Increases in all, except education levels, were found to result in increases in drug expenditures. Findings from this study could better inform intervention policies and cost-containment strategies for state Medicaid drug benefit programs.