Did Michigan's policies reduce the daily cost of drug therapy for its dual eligible beneficiaries?
Background . Michigan Medicaid outpatient prescription drug program implemented the following four policies to address rising expenditures considered "out of control": (1) February 2002: Preferred Drug List (PDL); (2) February 2003: Joint Purchasing Arrangement (JPA); (3) November 2003: Maximum Allowable Cost (MAC); and (4) May 2004: Multi-State Purchasing Supplemental Rebates Agreement (MPSRA). Objective . To evaluate and quantify the impact of policies on utilization patterns and the daily cost of therapy. Study design . Study employed cardiovascular prescription drug claims covering FY 2000-2004 for dual eligible beneficiaries. Regression analysis using Newey-West estimator to correct for autocorrelation was used. Comparative analysis to MEPS data for select products was done. Results . The daily cost of therapy fell by 9% over the study period. The daily cost decreased and increased significantly when MAC pricing and the MPSRA policies were implemented respectively, and the PDL and JPA had no significant impact. The daily cost of generics increased and brands decreased reflecting mix effects. The daily cost to both Medicaid and private payers decreased. Policies generated minimal intertherapeutic and considerable intratherapeutic substitution in sub-classes with many competing products. Market share of the two most prescribed products by therapeutic sub-class increased by 27% and the generics share went up by 83%. Study limitations include omitted manufacturer rebates and administration expenses, overlapping policies, pre-post research design with no control group and short post-implementation period. Michigan not only paid a lower price for the most prescribed cardiovascular drugs compared to the average state but that cost containment policies were effective in reducing the daily cost of therapy. Conclusion and policy implications . Policies encouraged generic use and shifted utilization to a few products in a therapeutic sub-class which reduced the daily cost of therapy. Cost saving was observed in sub-classes with many competing products. Study noted there may be an appropriate role of policy, diminishing returns may occur and that tradeoffs may impact policy effectiveness. Cost-benefit analysis in optimal policy design may be useful in the current era of multiple cost-containment.
Year of publication: |
2007-01-01
|
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Authors: | Kibicho, Jennifer Waruguru |
Publisher: |
Wayne State University |
Subject: | Business costs | Public health | Welfare | Health care |
Saved in:
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