The Medicaid program operated by New York State plans to introduce a preferred drug list this summer and, in order to get their products included pharmaceutical manufacturers will be required to provide them at substantial rebates.

Physicians who wish to provide their Medicaid patients with medicines which are not on the PDL will have to obtain prior authorization in order to do so from the NY State Health Department, which has estimated that the measure will produce savings of $200 million in its first year alone.

The Health Department is currently examining which drug categories should be included in the PDL, and says the prices of listed products will be determined by direct negotiation with the manufacturers or through joint negotiations conducted with other states, reports the Associated Press.

Last November, an analysis by the New York Times noted that prescription drug spending by state’s Medicaid program was the highest nationwide, having risen from $1.7 billion in 1999 to $3.8 billion in 2004. The study went on to claim that much of this was to do with New York’s “failure to spend its money more prudently,” noting that the state frequently pays more that other state Medicaid programs for prescription drugs and that it “lacks even the most basic controls” used by other states and private health insurers.

Also, a report published last December by the federal Agency for Healthcare Research and Quality found that, nationwide, Medicaid paid 14.3% of the prescription drug expenditures for people under the age of 65 in 2003. However, for New York the percentage had been 29.4%.