Do State Cost Control Policies Reduce Medicaid Prescription Drug Spending?

Authors

  • Kosali Simon,

    1. Kosali Simon, Associate Professor, Department of Policy Analysis and Management, 106 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-7103; e-mail: kis6@cornell.edu. Sharon Tennyson, Associate Professor, Department of Policy Analysis and Management, 137 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-2619; e-mail: st96@cornell.edu. Julie Hudman, Independent Consultant, 204 Sunrise Road, Ithaca, NY 14850; phone: (607) 229-3873; e-mail: julie_hudman@yahoo.com. This research was funded by an unrestricted educational grant from the Merck Company Foundation. The authors would like to thank Gail Durrer of National Pharmaceutical Council (NPC) for invaluable assistance with the data; Daniel Maeng, Jamie Jun, and May Wong for excellent research assistance on the project; and officials at state Medicaid offices for reviewing the state policy data used in this article. We are grateful for helpful comments from Amy Davidoff, Bowen Garrett, and Melissa Kearney. This article was subject to double-blind peer review.
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  • Sharon Tennyson,

    1. Kosali Simon, Associate Professor, Department of Policy Analysis and Management, 106 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-7103; e-mail: kis6@cornell.edu. Sharon Tennyson, Associate Professor, Department of Policy Analysis and Management, 137 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-2619; e-mail: st96@cornell.edu. Julie Hudman, Independent Consultant, 204 Sunrise Road, Ithaca, NY 14850; phone: (607) 229-3873; e-mail: julie_hudman@yahoo.com. This research was funded by an unrestricted educational grant from the Merck Company Foundation. The authors would like to thank Gail Durrer of National Pharmaceutical Council (NPC) for invaluable assistance with the data; Daniel Maeng, Jamie Jun, and May Wong for excellent research assistance on the project; and officials at state Medicaid offices for reviewing the state policy data used in this article. We are grateful for helpful comments from Amy Davidoff, Bowen Garrett, and Melissa Kearney. This article was subject to double-blind peer review.
    Search for more papers by this author
  • Julie Hudman

    1. Kosali Simon, Associate Professor, Department of Policy Analysis and Management, 106 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-7103; e-mail: kis6@cornell.edu. Sharon Tennyson, Associate Professor, Department of Policy Analysis and Management, 137 MVR Hall, Cornell University, Ithaca, NY 14853; phone: (607) 255-2619; e-mail: st96@cornell.edu. Julie Hudman, Independent Consultant, 204 Sunrise Road, Ithaca, NY 14850; phone: (607) 229-3873; e-mail: julie_hudman@yahoo.com. This research was funded by an unrestricted educational grant from the Merck Company Foundation. The authors would like to thank Gail Durrer of National Pharmaceutical Council (NPC) for invaluable assistance with the data; Daniel Maeng, Jamie Jun, and May Wong for excellent research assistance on the project; and officials at state Medicaid offices for reviewing the state policy data used in this article. We are grateful for helpful comments from Amy Davidoff, Bowen Garrett, and Melissa Kearney. This article was subject to double-blind peer review.
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Abstract

We present the first systematic analysis of state policies limiting prescription drug access under Medicaid during 1990–2004, documenting their impact on states’ Medicaid prescription spending growth. We see substantial variation in the number and type of policies used by states, but a clear upward trend in restrictions over time. Analysis of state level annual spending growth shows that these restrictions have in general helped contain Medicaid prescription drug costs and that some approaches, such as the use of preferred drug lists (PDLs) and tiered copayment systems, may have been more effective than others.

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