The effect of managed care on prescription drug costs and benefits

Alan Lyles, Francis B. Palumbo

Research output: Contribution to journalReview article


This review discusses the approaches to prescription drug payment practices taken by managed care to influence drug use and costs, and presents the research evidence supporting these interventions. In the US, drugs were infrequently covered as an ambulatory benefit under fee-for-service indemnity insurance; however, health maintenance organisations almost always provide outpatient drugs and consequently have developed approaches to influence drug use and manage its costs. Managed care as a set of tools and as an organisational form is moving toward more restrictions on direct access to pharmaceuticals as a covered benefit. Options for influencing drug use and cost may address access, ingredient costs, dispensing fees and cost sharing. The formulary process is the foundation for a managed pharmacy benefit and integrates these options. The limited empirical evidence for an effect of managed care on drug costs and use is reviewed. A proposed research agenda includes evaluation of the effects of restrictive formularies, capitation, disease management and other programmes to influence the cost and use of pharmaceuticals.

Original languageEnglish (US)
Pages (from-to)129-140
Number of pages12
Issue number2
StatePublished - Mar 2 1999

ASJC Scopus subject areas

  • Pharmacology
  • Health Policy
  • Public Health, Environmental and Occupational Health

Fingerprint Dive into the research topics of 'The effect of managed care on prescription drug costs and benefits'. Together they form a unique fingerprint.

  • Cite this