The Medicaid Preferred Drug List is a compilation of medications that Medicaid will cover the cost for without a Prior Authorization (PA) request.1
The Affordable Care Act (ACA) extended federal rebates for prescription drugs provided under Medicaid managed care arrangements. As a result, more states have carved drug coverage into managed care arrangements.2
PDL’s are made up of generic medications and those that have had their prices negotiated between pharmaceutical companies and Medicaid. Because of the cost savings, in most states physicians are required to either prescribe medications on the PDL or receive prior authorization to act otherwise.2
PDL’s are used to encourage physicians to prescribe specific medications as a mechanism to negotiate higher rebates. States often incur higher copays or require prior authorization for drugs that are not on their PDL.2
To date, over 30 states utilize PDL’s within their Medicaid programs. Although the PDL often varies from state to state, most PDLs include generic equivalents and cost-effective and innovative medications within the same class as more expensive ones.3
States are required by federal law to incorporate a drug utilization review (DUR) program in place to help ensure appropriate drug use.2
AMA Ovsag K, Hydery S, Mousa SA. Preferred drug lists: potential impact on healthcare economics. Vasc Health Risk Manag. 2008;4(2):403-413. doi:10.2147/vhrm.s926
Dolan R, Tian M. Management And Delivery Of The Medicaid Pharmacy Benefit. Kaiser Family Foundation; 2019. https://www.kff.org/wp-content/uploads/2019/12/Management-and-Delivery-of-Pharmacy-Benefits-in-Medicaid.pdf.
State Medicaid Preferred Drug Lists. KFF. https://www.kff.org/other/state-indicator/medicaid-preferred-drug-lists/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D. Published 2019.