The Effect of Florida Medicaid’s State-Mandated Formulary Provision on Prescription Drug Use and Health Plan Costs in a Medicaid Managed Care Plan

BACKGROUND: Formulary or preferred drug list (PDL) management is an effective strategy to ensure clinically efficient prescription drug management by managed care organizations (MCOs). Medicaid MCOs participating in Florida's Medicaid program were required to use a state-mandated PDL between May and August 2014. OBJECTIVE: To examine differences in prescription drug use and plan costs between a single Florida Medicaid managed care (MMC) health plan that implemented a state-mandated PDL policy on July 1, 2014, and a comparable MMC health plan in another state without a state-mandated PDL, controlling for sociodemographic confounders. METHODS: A retrospective analysis with a pre-post design was conducted using deidentified administrative claims data from a large pharmacy benefit manager. The prepolicy evaluation period was January 1 through June 30, 2014, and the postpolicy period was January 1 through June 30, 2015. Continuously eligible Florida MMC plan members were matched on sociodemographic and health characteristics to their counterparts enrolled in a comparable MMC health plan in another state without a state-mandated formulary. Outcomes were drug use, measured as the number of 30-day adjusted nonspecialty drug prescriptions per member per period, and total drug plan costs per member per period for all drugs, with separate measures for generic and brand drugs. Bivariate comparisons were conducted using t-tests. Employing a difference-in-differences (DID) analytic approach, multivariate negative binomial regression and generalized estimating equation models were used to analyze prescription drug use and costs. RESULTS: The final analytical sample consisted of 18,372 enrollees, evenly divided between the 2 groups. In the postpolicy evaluation period, overall and generic use declined, while brand use increased for members in the Florida health plan. Drug costs, especially for brands, significantly increased for Florida health plan members. No significant changes were observed over the same time period in the control health plan members. DID analyses indicated that the decline in overall drug use was 6% lower (P = 0.020), and the increase in plan costs was 27% higher (P = 0.002) among Florida health plan members compared with control group members. CONCLUSIONS: Members in a Florida Medicaid health plan with a state-mandated PDL saw declines in overall and generic drug use and an increase in drug plan costs. States considering a state-mandated PDL should take into account potential effects of decreased generic drug use and increases in prescription drug plan costs.