Comments on a Study on the Effects of a Restrictive Drug Formulary

PAD-80-42: Published: Jan 21, 1980. Publicly Released: Jan 21, 1980.

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GAO reviewed a study which discussed the fact that the high cost of the Medicaid program has forced many States to contain costs via restrictions on optional services such as prescribed drugs. The author concluded that the savings accrued from outpatients' and long-term care patients' drug purchases, which formerly would have been reimbursed through Medicaid, was more than offset by the increase in the demand for nonprescription services. No causal relationship between the decrease in drug prescription costs and the increase in non-prescription services was demonstrated in the study. The author concluded that restricting some medications caused many elderly and disabled persons to become more ill and use more non-prescription services.

The population sample used in the study might have reflected a population more likely to require all types of services, regardless of the formulary policy. Those diseases which were affected most by the restrictive drug formulary experienced the only increase in the frequency of diagnoses among the twelve most common disease classes. The author's assumptions might not be valid. It is difficult to determine, from a broadly defined disease class, whether or not a specific drug would have been beneficial if prescribed. The rationale applied to ranking the restricted drugs' degree of impact on disease classes is not well supported or documented.

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