The Impact of Medicaid Preferred Drug Lists on Utilization and Costs of Antipsychotic Medication

Abstract

**Background:** Few studies have attempted to assess the effectiveness of formulary management in reducing the antipsychotic costs and utilization across U.S. state Medicaid programs, despite concerns about the potential impact of such formulary management on Medicaid patient health outcomes. **Objectives:** Compare antipsychotic utilization and total costs across Medicaid states with preferred drug list (PDL) programs vs. states without PDLs in place. **Methods:** The following data from 48 Medicaid fee-for-service (FFS) programs were collected for calendar year 2010: antipsychotic prescription use (IMS Health); formulary management (MediMedia, Medicaid FFS programs’ websites), and patient enrollment (MediMedia). For each program, the total antipsychotic cost per capita was estimated by multiplying antipsychotic utilization by list price (First DataBank), then dividing by program enrollment. To control for differences in the prevalence of antipsychotic use among Medicaid patients across states, cost estimates were adjusted using state-level mental-health illness prevalence data (Kaiser Family Foundation, Substance Abuse and Mental Health Services Administration [SAMHSA], and Thomson Healthcare). Volume-based market share of branded antipsychotics was also calculated to compare branded vs. generic antipsychotic use across states. Significance of difference between the means of PDL and non-PDL states was tested using a two-sided, two sample t-test, assuming unequal variances between samples. **Results:** Among the 48 states studied, 33 (68.8%) used PDLs as a means to limit access to branded antipsychotic medications, including those states with the largest populations with a mental-health illness (e.g. New York, California, Texas). In our analyses, the average difference in antipsychotic costs per capita between PDL and non-PDL states was less than $0.6M or 1.5% (p=0.95). The average difference in antipsychotic utilization per capita was less than 2.8% (p=0.91) and in branded antipsychotic market share was 0.7% (p=0.59). **Conclusions:** Although a majority of Medicaid states use PDLs to manage antipsychotic utilization, this analysis found no evidence of significant advantages for these Medicaid programs in terms of lowering percapita antipsychotic costs or increasing generic utilization.