Cost effects of restricting cost-effective therapy

Area of Science:

• Health Economics
• Pharmacoeconomics
• Gastroenterology

Background:

• Medicaid expenditures for peptic ulcer disease are a significant concern.
• Pharmaceutical formularies can impact healthcare costs.
• Understanding the cost-effectiveness of formulary changes is crucial for resource allocation.

Purpose of the Study:

• To evaluate the cost effects of implementing a closed pharmaceutical formulary on Medicaid expenditures for peptic ulcer disease.
• To compare total healthcare costs before and after the formulary change.
• To analyze changes in per-patient costs and specific service utilization.

Main Methods:

• Comparative analysis of Medicaid expenditures for peptic ulcer disease treatment.
• Pre- and post-implementation study design assessing a closed pharmaceutical formulary.
• Examination of total costs, patient volume, cost per patient-month, pharmaceutical costs, physician payments, and inpatient hospital costs.

Main Results:

• Total Medicaid costs for peptic ulcer treatment decreased by 15.0% under the closed formulary.
• The primary driver of savings was a reduction in the number of patients served.
• Cost per patient-month of therapy increased by 9.4%, with pharmaceutical costs decreasing by 78.9% but physician and inpatient costs increasing by 3.1% and 23.6%, respectively.

Conclusions:

• A closed pharmaceutical formulary led to short-term savings in Medicaid spending for peptic ulcer disease.
• Increased per-patient costs and utilization of more expensive services (physician, inpatient) were observed.
• Potential for future increased expenditures exists as sicker patients may require more intensive, costly treatments.