Prescription Drugs and Medicaid

Inappropriate use of prescription drugs can lead to drug-induced illness, hospitalization, and even death. Inappropriate drug use can also prove expensive for the Medicaid program. As a result, Congress mandated that states establish utilization review programs--called prospective reviews--to review Medicaid prescriptions before drugs are dispensed. Automated prospective drug utilization review systems are proving a low-cost way for states to help both doctors and pharmacies safeguard Medicaid recipients from potentially harmful medical reactions. Although the main emphasis of these systems--appropriately--has been safety, both safety benefits and dollar savings accrue from their use. Because results vary on the basis of how such systems are administered, it is important that states share their experiences. Absent any analysis of data from the Iowa demonstration project or any concerted effort by the Health Care Financing Administration to collect and share other states' experiences, states have had only limited access to both safety and cost data--information that is critical to informed decisionmaking and to maximizing the effectiveness and efficiency of automated prospective drug utilization review systems.

GAO found that: (1) between January 1994 and June 1995, PRODUR systems reviewed screened over 31.7 million prescription drug claims, and alerted pharmacists to potentially inappropriate drug treatments; (2) over 650,000 prescriptions were cancelled because of potential risks to patients; (3) PRODUR systems have reduced Medicaid costs by denying prescriptions to ineligible recipients, preventing hospitalizations due to illnesses caused by inappropriately prescribed drugs, and detecting and eliminating fraud and abuse; (4) PRODUR systems are more cost-effective than traditional review systems; (5) states implement their PRODUR systems differently because there is no guidance on PRODUR system implementation; and (6) each state has its own drug utilization review board which independently sets screening criteria and policies, but states have no systematic way to share experiences and best practices.

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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