Michael Hales, director of the Division of Health Care Financing, said Wednesday that in its first year, the preferred drug list saved nearly $546,000 in general funds - about $2.75 million shy of the Utah Department of Health's original estimates.

The difference, said UDOH Director David Sundwall, can be chalked up to last-minute changes the Senate made to SB42, which permitted the list.

It aims to contain Medicaid costs by identifying the most effective drugs, then negotiating discounts with manufacturers and encouraging their use.

Key to making that work, however, is requiring doctors to receive a prior authorization from the health department to prescribe drugs not on the list.

But lawmakers - concerned it could cost Medicaid more in the long run if patients had complications or reactions to listed drugs - amended it to allow doctors to write "dispense as written" on prescriptions for other drugs.

"That really kind of took the teeth out of it," Sundwall said.

Hales told the Health and Human Services Interim Committee the list's full savings were also not recognized this fiscal year because the classes of drugs it covers were phased in over several months.

In the 2009 fiscal year - with all drug classes included and lower administrative costs - he projects Utah's Medicaid program will save closer to $1.2 million.

As the economy sours and Medicaid's rolls swell, however, those savings will have to grow, Sundwall said. This legislative session, he intends to ask lawmakers to reinstate the prior authorization requirement.

"I think that's almost inevitable given the fact we're already seeing an increase in [Medicaid] enrollment," he said.

Meanwhile, the health department is working with the Utah Medical Association to approach doctors who are most frequently overriding the preferred drug list, Hales said.

UDOH will also ask the Legislature to redefine "psychotropic," he said, so that more classes of drugs can be added to the list.

lrosetta@sltrib.com