Drug Utilization Review – Overview

What are Medicaid Drug Utilization Review (DUR) Boards and Pharmacy and Therapeutics (P&T) Committees?

States must review new medications when they come on the market to decide where the medication will be placed on the drug formulary for Medicaid.  To facilitate this process, federal Medicaid rules require each state to have a comprehensive Drug Utilization Review (DUR) program that assesses the utilization, quality, medical appropriateness, and cost of prescribed medication through the evaluation of claims data.  The DUR program must be targeted, in part, at reducing misuse of outpatient prescription drugs covered under the state’s Medicaid program.  

Each state has its own process. In some states, the DUR program is run by a DUR Board, and in some states, it is run by a Pharmacy and Therapeutics (P&T) Committee.  DUR programs can conduct both prospective and retrospective drug utilization review – they can review drugs newly on the market, or drugs that have been available on the market for some time.  They only review drugs that have received FDA approval.

Why do DUR Boards and P&T Committees matter?

DUR Boards and P&T Committees determine how each drug must be covered by Medicaid in that state.  This often means putting criteria in place to limit or even restrict coverage.  Some examples of those limits include age requirements, step therapy requirements, or even invasive tests for the patient.  These limits can have the practical effect of blocking patient access to a drug.

Who serves on DUR Boards and P&T Committees?

The people who serve on DUR Boards and P&T Committees come from a wide variety of experience and backgrounds.  Requirements differ by state, but in general, those who serve are not required to have any expertise or knowledge regarding the specific disease or condition treated by the drug they are reviewing.  They may or may not have medical experience.  For example, DUR Boards and P&T Committees may include doctors and pharmacists, but they may also include social workers and lawyers.  

What is the Medicaid Drug Rebate Program (MDRP) and how does it affect DUR decisions?

The Medicaid Drug Rebate Program (MDRP) is an agreement between the Centers for Medicare & Medicaid Services (CMS), state Medicaid agencies, and participating drug manufacturers.  It is designed to help offset the federal and state costs of most outpatient prescription drugs dispensed to Medicaid patients.  Participation in the program is voluntary, but if states utilize the MDRP, they are mandated to cover all drugs that are FDA-approved.  

How often do DUR Boards and P&T Committees meet?

Each state is different.  Some meet quarterly, others meet monthly, and others meet as needed.  Look at Section 7 of this toolkit for a list of each state’s DUR body – including a link to the DUR or P&T website – along with other information about their meeting dates.

Glossary of common terms:

DUR Boards and P&T Committees use a variety of terms that may not be familiar, or may mean something different than when they’re used in other contexts.  Here are some of the most common terms. 

• Drug Utilization Review (DUR) Board: A state DUR Board is usually comprised of health care professionals. The DUR Board reviews, evaluates and ultimately provides recommendations for the Medicaid preferred drug list (or drug formulary).

• Drug Formulary: A formulary is a list of generic and brand name prescription drugs covered by a particular public or private health insurance plan.

• Fail First policy: Another term for Step Therapy.  A policy or practice used by insurers that requires the least expensive drug to be prescribed to a patient first, even if the patient’s doctor has prescribed a different therapy or believes another therapy is the best medical option for the patient’s condition.  To gain access to the preferred treatment, the patient must “fail first” on the least expensive drug.

• Medicaid: Medicaid is a joint federal and state program that, together with the Children’s Health Insurance Program (CHIP), provides health coverage for people with disabilities, pregnant women, and low-income adults, children, and elderly people.  Every state’s Medicaid program is different, and most states are modernizing and updating their programs.

• Out-of-Pocket Expenses: Expenses for medical care that aren’t reimbursed by insurance. Out-of-pocket costs include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.

• Pharmacy and Therapeutics (P&T) Committee: The P&T Committee is responsible, among other things, for all matters related to the use of medications in the state’s Medicaid program, including developing and maintaining the Medicaid formulary for the state.

• Rebate: A form of price concession paid by a pharmaceutical manufacturer to the sponsor of a health plan (or to a pharmacy benefit manager working on the plan’s behalf).  Rebates are a tool that can be used to keep certain drugs on a plan’s formulary, or to give certain drugs preferential treatment – or even block other treatments from being on the formulary.  This brief video developed by the Kaiser Family Foundation in response to a Trump-era rebate proposal gives a good overview of how rebates work in health care.

Step Therapy policy: A policy or practice used by insurers that requires the least expensive drug to be prescribed to a patient first, even if the patient’s doctor has prescribed a different drug or believes another drug is the best medical option for the patient’s condition.  To gain access to the preferred treatment, the patient must start with the least expensive drug as a first step, and depending on the state and insurance plan, may have to go through other “steps” before getting coverage for the preferred treatment.