Background: Prior authorization--mandatory advance approval for the use of expensive medications--is now the primary method by which Medicaid programs control expenditures for drugs. However, whether this policy reduces expenditures for specific drugs without causing the unwanted substitution of other drugs or medical services has been largely unstudied. We evaluated the effects of a prior-authorization policy involving nongeneric nonsteroidal antiinflammatory drugs (NSAIDs) in the Medicaid program in Tennessee.
Methods: We compared monthly Medicaid expenditures that were potentially affected by the policy change during the year before and the two years after its implementation. We studied prescriptions for NSAIDs, other analgesic or antiinflammatory drugs, and psychotropic drugs, as well as outpatient services and inpatient admissions for the management of pain or inflammation.
Results: At the midpoint of the base-line year, 495,821 people were enrolled in Medicaid. During that year, mean annualized Medicaid expenditures for NSAID prescriptions amounted to $22.41. Expenditures decreased by 53 percent (95 percent confidence interval, 48 to 57 percent) during the next two years, for an estimated savings of $12.8 million. The reduction in expenditures resulted from the increased use of generic NSAIDs, as well as from a 19 percent decrease in overall NSAID use (95 percent confidence interval, 13 to 25 percent). There was no concomitant increase in Medicaid expenditures for other medical care. Regular users of nongeneric NSAIDs, those most affected by the policy change, had similar reductions in NSAID expenditures and use, with no increase in expenditures for other medical care.
Conclusions: Prior-authorization requirements may be highly cost effective with regard to expenditures for NSAIDs, drugs that have very similar efficacy and safety but substantial variation in cost.