In 2011, when the Florida legislature created the state's Medicaid Managed Care (SMMC) program, one of the requirements for participating managed care organizations (MCOs) was to use a state-mandated formulary drug list (PDL), rather than allowing plans to maintain their own formulary, as was previously allowed.

To understand the impact of this change, our research team at the Express Scripts Lab studied changes in prescription drug utilization and plan costs among Florida Medicaid members required to use the state-mandated PDL and compared them to members enrolled in a similar Medicaid managed care health plan in a different state, where no such state-mandated PDL policy existed.


As part of our study, presented during the Academy of Managed Care Pharmacy (AMCP) Nexus meeting, we examined costs in both health plans during a period of time prior to the implementation Florida's state-mandated formulary, and after its implementation.

To ensure we fairly compared utilization changes across health plans, we applied a methodology known as a one-to-one greedy matching algorithm to match patients on demographic, health, and Medicaid coverage-related variables.

The Results

Overall drug utilization declined, yet plan costs increased among Florida Medicaid members in the period after state-mandated PDL policy implementation, mainly driven by decreases generic utilization and increases in brand drug utilization and cost.

Specifically, when comparing Florida members pre- and post- implementation of the mandated formulary, overall plan drug costs increased by more than 45% in the post-policy period, driven by a nearly 49% increase in brand drug plan costs.

Among the Florida Medicaid plan members, utilization of overall traditional, or non-specialty, drug claims declined by about 9% with generic drug utilization declining by 13%. Meanwhile, brand drug utilization increased by 50% in the post-policy period when compared to pre-policy period.

In comparison, both utilization and cost remained stable during the same time period for the other reference health plan members who were not subject to a state-mandated formulary.

Also noteworthy is the higher proportion of brand drugs switching from non-formulary status pre-implementation to formulary status in the post-implementation period in the Florida plan: 79% compared to just 1% in the comparison plan.


The findings of this study offer evidence that state-mandated formularies may contribute to unintended consequences of decreased generic drug utilization and increased plan costs, potentially resulting from the increased number of brand drugs that may become part of the drug formulary after mandated formularies are implemented.

Additional research is needed to better understand the impact of state-mandated formularies, inclusive of the impact of state rebates on overall drug spend. However, we can infer from this study that state regulations should permit participating plans to leverage utilization management strategies, including MCO managed formularies, to control costs and advocate for appropriate, cost-effective therapy. States may be able to prevent any unforeseen effects on medication use and plan costs with mandated formularies by taking into consideration drug utilization changes among beneficiaries and health plan financial viability.

Overall, partnership between state Medicaid agencies and health plans is essential for ensuring access to appropriate medications while cost-effectively managing access to these medications. States need to anticipate increased drug costs for health plans and make equitable adjustments to plan capitation rates.

Shopping for Omega-3s: Top Sources at Your Store
Sunday, October 01, 2017

Lung Cancer Risks: Myths and Facts
Thursday, July 13, 2017

Guide to Kidney Cancer
Thursday, July 13, 2017

Do You Know the Benefits of Walking?
Saturday, June 17, 2017

High-Protein Diets: The Good and the Bad
May 10 ,2017

Eye Exams: More Important Than You Might Think
March 22 ,2017

Warning Signs Of Heart Attack,Stroke & Cardiac Arrest
February 27 ,2017

What to Do to Help Prevent Cancer
February 10 ,2017

15 Cancer Warning Signs Never to Ignore
December 29 ,2016

Foods to Help Your Body Fight Cancer
November 05, 2016

Florida Medicaid's State-Mandated Formulary Impact on Utilization and Cost
October 13, 2016

15 Ways to Be Happier
Sep 27, 2016

16 Tips for Pain-Free Joints
Sep 8, 2016

Screening reduces late-stage breast cancer in Calif.
Sep 8, 2016

The Life-Changing Magic of Choosing the Right Hospital
August 26, 2016

Contraceptive Coverage: Fertile Ground for Controversy
August 26, 2016

How Much Do You Know About Spreading Germs?
August 11, 2016

Taking Action on Medicare Prescriber Enrollment
June 30, 2016

Cancer doctors leading campaign to boost use of HPV vaccine
June 24, 2016

ACH Newsroom Main Page ACH Newsroom Main Page

Return to the ACH Newsroom