Clinical and Financial Outcomes Associated With a Proton Pump Inhibitor Prior-Authorization Program in a Medicaid Population

Published Online: January 15, 2005
Thomas Delate, PhD; Douglas E. Mager, BS; Jagat Sheth, PhD; and Brenda R. Motheral, PhD

Objective: To examine the clinical and financial outcomes associated with a proton pump inhibitor (PPI) prior-authorization policy.

Study Design: Interrupted time-series analyses of antisecretory prescription drug claims. Separate 6-month retrospective cohort analyses were conducted to estimate the clinical and financial effects of the policy.

Patients and Methods: More than 1.2 million Medicaid enrollees, with subgroup analyses of 5965 continuously eligible, potential antisecretory medication users. Measures included antisecretory drug expenditures, proportions of patients with at least 1 gastrointestinal diagnosis and gastrointestinal-related ambulatory and inpatient medical service visit, and subsequent gastrointestinal-related and total medical service expenditures.

Results: There was a 90.9% decrease in PPI per-member-per-month expenditures and a 223.2% increase in histamine2-receptor antagonist (H2A) per-member-per-month expenditures in the month immediately following the implementation of the policy (P < .001 for both). A greater proportion (80.7%) of prior-authorization eligible enrollees who received a PPI had at least 1 diagnosis for a gastrointestinal condition than enrollees who received an H2A (64.1%) or no antisecretory drugs (48.4%) (P < .001 for both). Two-part, finite mixture regression analyses indicated that the enrollees who received an H2A or no antisecretory drugs were no more likely to have incurred greater total medical care expenditures than enrollees who received a PPI.

Conclusion: Prior authorization for PPIs had the effect of reducing use of high-cost PPIs, while encouraging use of lower costing H2As without evidence of adverse medical consequences.

(Am J Manag Care. 2005;11:29-36)

Increasing enrollment in Medicaid, combined with rising drug and health service costs, has led to large increases in Medicaid expenditures.1,2 Approximately 20% of states' budgets are devoted to financing for Medicaid, and expenditures for Medicaid are among the fastest growing items in the federal and state budgets.3 On average, fee-for-service Medicaid programs have seen rises of 19.6% per year in ambulatory prescription drug expenditures between fiscal years 1998 and 2001.4 Therefore, Medicaid programs are taking assertive measures to manage drug expenditures.5-8

The Omnibus Reconciliation Act of 1990, as amended in 1993, allows prior authorization (PA) as a means of drug cost containment.9 Prior authorization restricts the use of specific medications by requiring an advance approval by the Medicaid program or its agent for the drug before dispensing to qualify for reimbursement.10 High-cost drugs that have a history of inappropriate use and effective drugs for which there are lower costing therapeutic equivalents typically are placed in PA programs.11 Prior authorization is designed to allow patient access to essential pharmacotherapies while promoting cost-effective prescription drug use.

States may require PA for any drug 6 months after Food and Drug Administration marketing approval.11 It is estimated that more than 40 states and the District of Columbia have some type of drug PA policy.4 Notwithstanding the widespread use of these programs, limited empirical evidence exists on their effects. The available evidence suggests that such programs reduce drug expenditures without incurring increased medical services use10; however, only 3 retrospective evaluations of Medicaid PA programs were found in the peer-reviewed literature.11-13 As PA programs expand to include other classes of drugs, research is needed to evaluate the clinical and economic effects of the programs.

Proton pump inhibitors (PPIs) are an example of a therapy class that is a candidate for PA. Proton pump inhibitors are indicated for short-term therapy of acute upper gastrointestinal (GI) disorders (eg, peptic ulcers and esophagitis), pathologic gastric hypersecretory conditions (eg, Zollinger-Ellison syndrome), and maintenance therapy with healed ulcers and erosive esophagitis.14 However, an estimated 30% to 70% of patients with painful reflux symptoms do not have GI conditions with sustained tissue damage.15 An alternate treatment for nonacute hypersecretory conditions exists in lower-cost histamine2-receptor antagonists (H2As).16,17 To channel potential PPI users to less expensive H2A alternatives when clinically appropriate (eg, dyspepsia and reflux without complications), the fee-for-service Medicaid program implemented a PA program that used diagnosis-and risk-based criteria18-23 to establish medical necessity (eg, erosive or ulcerative GI conditions) for approval of PPIs. During the 12 months before the implementation of the PPI PA policy, PPIs accounted for 5.6% ($45.5 million) of the net pharmacy expenditures and ranked first in expenditures among all drug therapy classes for the Medicaid program (data not shown).

This study used population-based, retrospective, longitudinal analyses of pharmacy and medical claims to evaluate the effects of the Medicaid program's PA policy for PPIs. The objective of the study was to examine the effectiveness of the PPI PA program from the perspective of the Medicaid program payer11,24-26 in regards to (1) its effect on antisecretory drug (ie, PPIs and H2As) expenditures and use, (2) the channeling of PPIs to those patients demonstrating a medical need for a PPI, and (3) the incurrence of unintended medical consequences.


Prior-Authorization Policy

Beginning on February 1, 2002, the Medicaid program required that PA be obtained for all PPI prescriptions (esomeprazole magnesium, lansoprazole, omeprazole, pantoprazole sodium and rabeprazole sodium) to qualify for reimbursement. Diagnosis-and risk-based clinical criteria were established for the PA program.18-23 Prescribers and pharmacies participating in the Medicaid program were sent notification of the PA requirement before the implementation of the policy. In addition, notifications of the impending requirement were appended as a banner message to Medicaid program remittance advices sent to prescribers and pharmacies. When a patient presented at the pharmacy with a PPI prescription without first receiving PA approval, pharmacists were alerted during the prescription adjudication process that authorization was required. Prescribers or pharmacists submitted PA requests by mail, fax, or toll-free telephone call to the Medicaid program's pharmacy benefit manager agent, and these requests were initially reviewed by a PA representative. Requests that were not approved during the initial phase were then reviewed by a pharmacist. The response was handled at the point of service for telephone calls, within 24 hours for a faxed request, or within 48 hours for a mailed request. For those patient requests that were denied, the prescriber was made aware of the 2 levels for appeals. The PA program was modified on April 1, 2002, because of concerns expressed by prescribers and patient advocates regarding the GI-related and other medical conditions for which initial therapy with PPIs was approvable.

Authorizations were valid for 6 months. Patients requesting a prescription for esomeprazole or rabeprazole were required to document therapeutic nonresponse with at least a 2-week course of 1 of the 3 preferred PPIs (lansoprazole, omeprazole, or pantoprazole). In addition, the PA program incorporated step therapy, whereby patients with nonerosive hypersecretory conditions were required to document therapeutic nonresponse with at least a 2-week course of an H2A (cimetidine, ranitidine, famotidine, or nizatidine) before approval for a PPI would be granted. Patients with a Helicobacter pylori infection were granted a 1-month PPI supply for use with antibiotic eradication therapy. The Medicaid program paid an administrative fee of $20 per PA request.

Study Design and Data Sources

To compare the change in net expenditures (including the administrative costs of the PA program) for antisecretory drugs, this study used the pharmacy benefit manager's ambulatory pharmacy reimbursement claim records for the Medicaid program for the 12 months before (hereafter referred to as the preperiod) and 12 months after (hereafter referred to as the post-period) the implementation of the PA policy (February 1, 2002) (Figure 1). Antisecretory prescriptions were converted to 30-day supplies (hereafter referred to as claims). The pharmacy benefit manager's pharmacy edit, PA request record, and eligibility information electronic files were used to identify continuously eligible patients (hereafter referred to as subjects) who attempted to have a PPI prescription filled from April 1, 2002, through May 31, 2002 (hereafter referred to as the index period) and their subsequent PA approval or denial status. These dates were chosen because the modified criteria that were put in place on April 1, 2002, were, at the time of the manuscript preparation, the current criteria used by the Medicaid program and because they allowed for an adequate follow-up with the data available.14,27 Patients without continuous eligibility were not included because these patients would not have complete data to allow for an adequate assessment of their health conditions and medical service use.


To assess the channeling of PPIs and possible unintended medical consequences, subjects' ambulatory and inpatient medical service claim records were obtained from MEDSTAT, the Medicaid program's medical claims database manager. These medical claims were examined to assess GI-related diagnoses and expenditures in the 6 months before (hereafter referred to as baseline) and after (hereafter referred to as followup) subjects' first attempt to have a PPI prescription filled (hereafter referred to as the index date) (Figure 1).

Subject Groups

All Medicaid Enrollees. Because the PA was applied to all enrollees in the Medicaid program, the base-case analysis consisted of all persons enrolled in the Medicaid program at any time during the preperiod and the postperiod. The base case provided a broad assessment of the effects of the PA policy change by allowing for the adjustment of per month expenditures based on increases or decreases in the enrollee population (ie, the prevalence of use of antisecretory drugs was not assumed to be static).

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