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Appropriate Drug Use and Prescription Drug Programs

Anatomy of Benefit Programs


Dale Christensen, R.Ph., Ph.D., Mescal S. Ferguson Distinguished Professor, School of Pharmacy, University of North Carolina, Chapel Hill, NC.

In order to effectively encourage the appropriate use of pharmaceuticals, it is important to understand the functions and levers within current prescription drug benefit programs. Dr. Christensen described:

  • Current attitudes and trends related to prescription drug benefit programs.
  • Common elements of prescription benefit programs.
  • The differences between publicly and privately funded prescription benefit programs.
  • Implications of the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) on Medicaid prescription benefits.

Christensen also discussed current strategies and techniques used by pharmacy benefit managers to control costs and ensure quality, as well as newer initiatives to enhance and promote the appropriate use of pharmaceuticals.

Christensen stated that currently cost is the primary driver of policy change and that quality issues are important but secondary. Given this environment, the first challenge in encouraging appropriate use of pharmaceuticals is getting physicians, pharmacists, and patients to accept change. The second challenge is to devise a method of assuring quality and effective drug prescribing and use.

Most prescription drug programs contain similar elements. They include:

  • A list of drugs covered.
  • A network of providers (preferred or open).
  • A claims-processing system.
  • A claims-review or quality-assurance (QA) system.
  • A professional advisory board (either a Pharmaceuticals and Therapeutics Committee or a Drug Utilization Review (DUR).

Christensen explained that publicly funded programs are fraught with restrictions that do not apply to privately funded programs. Among the various public programs that policymakers may look toward altering, Medicaid is the program that places greater emphasis on access to care than cost-control and is perhaps the most restrictive. In addition, their quality assurance and cost-control efforts are generally underfunded, and they are restricted by rules and regulations more so than are privately funded programs.

In terms of restrictions, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) has serious implications for Medicaid prescription drug benefit programs due to requirements for rebates, prospective and concurrent QA programs and retrospective DUR. The rebate program effectively shields consumers from the true costs of the drugs. The requirement of prospective, concurrent QA measures was meant to assure optimal drug prescribing but actually created disincentives or a lack of incentives to do so. While the DUR requirement gave States considerable latitude to assess prescription drug use, it led to inconsistent performance across States. Additionally, DUR activities often received inadequate funding in State programs. A significant drawback of the Medicaid DUR requirement is that it forces a focus on drug use rather than disease state and fosters a tendency toward managing within a drug silo rather than managing care, disease states, and costs.

Pharmacy Benefit Managers (PBMs) administer many privately funded prescription drug benefit programs. In contrast to publicly funded programs, PBMs are very skilled in managing data, the cost of prescription drugs, and the value of a pharmacy benefit. PBMs have very specific mechanisms and control points in managing a drug benefit.

With respect to quality, PBMs utilize retrospective DUR and QA measures such as:

  • Claims review.
  • Prescriber profiling.
  • Recipient profiling.

PBMs also utilize interventions such as:

  • Academic detailing.
  • Mailed letter interventions.
  • Poly-pharmacy case reviews.
  • Registered pharmacist prescriber teams.

Christensen noted that in addition to global health care shifts (such as the move from provider control to payer/patient/purchaser control, from episodic care to long-term provider-patient relationships, and from delivering services to managing costs), managed pharmacy care has developed its own series of shifts including:

  • Fee-for-service to capitation payments.
  • Filling prescriptions to optimizing drug therapy.
  • Pharmacies as profit centers to pharmacies as cost centers.
  • Physicians as prescribers to physicians as partners.
  • Stand-alone pharmacies to network pharmacies.
  • Treating illness to maintaining wellness.

Disease and case management play an important role in the appropriate use of pharmaceuticals and have important economic implications for purchasers. A new approach to disease and case management within a pharmacy benefit program might include offering enhanced services to patients with targeted chronic disease or economic incentives such as waived co-pays.

Christensen reminded the participants that quality improvement efforts can play a major role in both encouraging appropriate use of pharmaceuticals and lowering costs. Christensen quotes the National Health Care Quality Forum: "Improved processes of care lead to better outcomes, including more satisfied patients, consumers, providers, purchasers, and lower costs."

To date, barriers to improving quality have resulted from:

  • Unclear goals and desired outcomes for quality measures.
  • A lack of reliable data on quality.
  • Payment mechanisms that offer little information about the relationship between payment and access to quality care.

Quality measures have generally been lacking for ambulatory pharmacy, however recent Institute of Medicine reports have prompted change. The National Committee on Quality Assurance's (NCQA) Health Plan Employer Data and Information Set (HEDIS®) is attempting to address data shortcomings. Some State boards have adopted regulations such as patient counseling and pharmacy quality assurance programs, but there is still room for them to push the quality agenda.

Christensen discussed medication therapy management, a pharmacy-based approach to both disease and case management with an emphasis on quality. Such programs monitor drug therapy appropriateness through collaboration between pharmacists and prescribers. The programs target high-risk, high-cost, and high prescription drug utilizers (such as seniors) and apply managed care principles to promote optimal cost-effective drug use. The challenge in implementing such programs for Medicaid involves:

  • Identifying target patients with indications suitable for medication therapy management.
  • Deciding on payment mechanisms.
  • Deciding on accepted measures to quantify impact.

Patients and drug conditions possibly eligible for medication therapy management include:

  • Patients at most risk for medical errors or suboptimal or costly care (e.g. high-drug-cost, high-use, high-risk patients, patients with specific target disease states, or with multiple chronic diseases).
  • Patients with drug-related problems (e.g., flagged at the point of service).
  • Patients with certain prescriptions (e.g., initial prescription for an inhaler, patients in board and care facilities, patients receiving a restricted drug.

Christensen explained that States vary in the ways they approach Medicaid prescription drug benefit programs and medication therapy management programs. He indicated that the States of Wisconsin, Iowa, Mississippi, and North Carolina have divergent but promising practices in administering medication therapy management programs.

Finally, Christensen concluded by stressing that it is important to consider new ways to make old ideas and constructs of prescription drug benefit programs work. He also stressed that medication therapy management programs should be a component of any prescription drug benefit program. Given the pressures on prescription drug benefit programs to manage care and control costs, it is important to have effective incentives and penalties. Christensen believes that in order to affect real change, the altering of current mechanisms may be best left to local or regional practitioners.


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Institute of Medicine reports: To Err is Human: Building a Safer Health System (2000), and Crossing the Quality Chasm: A New Health System for the 21st Century (2001). National Academy Press: Washington DC.

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Smith DH, Christensen DB, Stergachis A, et al. A randomized controlled trial of a drug use review intervention for sedative hypnotic medications. Med Care 1998 Jul;36(7):1013-21.

The National Committee for Quality Assurance. URL:

The National Quality Forum. URL:

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