Prescription Drugs

Inappropriate drug therapy poses a significant health risk to Medicaid patients and could be adding hundreds of millions of dollars each year in unnecessary drug and hospitalization costs. Use of automatic systems linked to statewide databases could provide a more thorough prospective review than reviews based on manual or local systems. However, the use of automated statewide drug utilization review (DUR) is not required by law. Although about two-thirds of the states use them, other states believe the systems are too costly and may not provide tangible benefits. Data provided by 5 states visited by GAO that use statewide DUR systems resulted in the cancellation of over 128,000 prescriptions that posed a risk to patients. Two of these states provided data showing that their systems led to the cancellation of over 250,000 early refill prescriptions as potential fraud or abuse. In addition to patient safety, such cancellations can result in program savings to the extent that the prescriptions are not subsequently filled or replaced with a substitute. Prescriptions cancelled by the 5 states GAO reviewed were valued at about $12 million. While data were not available to show actual savings from these cancellations, GAO believes the sheer magnitude of cancellations indicates a significant savings potential for the Medicaid program.

GAO found that: (1) although not required to, two-thirds of the states and the District of Columbia plan to establish statewide automated prospective DUR systems to detect inappropriate drug therapy for Medicaid patients and reduce unnecessary drug and hospitalization costs; (2) estimates of inappropriate drug therapy range from 3 percent for the general population to 28 percent for the elderly; (3) in the five states reviewed, prospective DUR systems detected and cancelled almost 400,000 prescriptions that either posed a serious health risk or represented potential program fraud or abuse; (4) implementation of automated prospective DUR systems would be cost-effective, since they are relatively inexpensive and could potentially save millions of dollars, particularly by preventing unnecessary hospitalizations; and (5) HCFA has taken some action to encourage use of automated prospective DUR systems, but states want HCFA to provide more information on costs, benefits, and system capabilities to aid them in acquiring and implementing the systems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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