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Newsletter Article


States Using Clinical Evidence to Cut Pharmacy Costs

Medicaid agencies report that pharmaceutical costs are a major driver of overall program spending growth. In 2004, Medicaid programs spent $36.6 billion on prescriptions—roughly 19 percent of national prescription drug spending. Many states believe that clinical evidence can be used to curtail pharmaceutical costs while ensuring beneficiary access to needed prescription drugs.

In 2004, with Fund support, researchers from the National Academy for State Health Policy and Georgetown University conducted site visits to examine how state Medicaid agencies in California, Florida, Kansas, Michigan, Missouri, and Washington manage their pharmacy benefits. In a new issue brief, the authors outline states' use of clinical evidence and preferred drug lists in four areas of pharmacy benefit management: the role of pharmaceutical and therapeutics committees in developing preferred drug lists; use of prior approval processes to enforce preferred drug lists; the role played by the Drug Effectiveness Review Project in helping states manage drug utilization; and the management of behavioral health pharmaceuticals.

Based on the experience of the site visit states, the researchers conclude that it is important for states to:

  • base drug coverage decisions on comprehensive, high-quality clinical evidence;
  • involve practicing clinicians and local opinion leaders in the process of applying the evidence to coverage decisions;
  • offer those affected by the policies an opportunity to provide input; and
  • ensure that beneficiaries who need access to non-preferred drugs are able to access those drugs when medically necessary.

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