What must states consider before moving to a single preferred drug list?

State Medicaid programs have recently been considering implementing a requirement that a single preferred drug list (PDL) be used across their fee-for-service (FFS) and managed care programs. States have considered a single PDL for multiple reasons, such as providing smooth continuity of care transitions for members who move between managed care plans, reducing confusion and potential administrative complexities for physicians who currently have Medicaid patients subject to different PDLs, and the potential to maximize federal and supplemental drug rebate dollars paid to the state.

Constructing a single PDL involves designating which drugs are preferred and non-preferred in each drug therapeutic class. Along with constructing a single PDL, a state will need to make policy and operational decisions so that a single PDL is administered consistently across its FFS and managed care programs. Policy considerations may include transitions, grandfathering, utilization management, and excluded therapeutic classes.

States will also need to estimate how much in federal and supplemental drug rebates they will receive under a single PDL relative to current conditions as well as how managed care capitation rates paid to health plans will need to change due to the single PDL.

In this paper, Milliman consultants Jill Herbold and Melanie Kuester discuss these decision points and considerations for states evaluating a single PDL requirement.