Do Open Formularies Increase Access To Clinically Useful Drugs?

Prologue: As more states turn to Medicaid managed care as a solution to rising costs, policymakers must consider both the economic and the clinical implications of their decisions. The findings here suggest that in the development and analysis of prescription drug formularies (lists of drugs that are approved for reimbursement) specifically and in health care reform more generally, clinical effects are not necessarily correlated with an economic approach. When only one level of analysis is considered, reform can have unintended, and costly, effects. Bryan Walser, a research associate in the Drug Policy Research Group at Harvard Medical School, holds a medical degree from the University of Virginia and a law degree from Harvard University. Dennis Ross-Degnan, an expert on methodological issues in drug studies, has conducted domestic and international research on medication use and the clinical and economic impacts of pharmaceutical policy. He is an assistant professor in Harvard Medical School's Drug Policy Research Group and in the Department of Ambulatory Care and Prevention. He holds a doctorate in health policy and management from Harvard. Stephen Soumerai is a leading authority on the clinical implications of pharmaceutical policy. He directs the Drug Policy Research Group and is associate professor of ambulatory care and prevention at Harvard Medical School. He is a consultant on medication use, cost containment, quality assurance, and program evaluation to many organizations. He holds a doctorate in health policy and management from Harvard. ABSTRACT: Before 1990 many state Medicaid programs maintained “restrictive” formularies, which denied reimbursement for unlisted prescription drugs. This type of formulary has been criticized for denying important medications to poor, medically needy persons. As part of the Omnibus Budget Reconciliation Act of 1990, restrictive formularies in Medicaid programs were disallowed. Based on research into the 200 top-selling prescription drugs in the United States, we conclude that eliminating Medicaid restrictive formularies improved access to a subset of the 200 best sellers, but that the majority of these products offered only questionable or no additional therapeutic benefit.