The JLARC sponsored performance audit examines the creation and use of the state preferred drug list (PDL) by the Health and Recovery Services Administration (HRSA) within the Department of Social and Health Services and the impact the PDL has had on Medical Assistance prescription drug utilization and costs. HRSA and two other state agencies select preferred drugs based on the safety, efficacy, effectiveness, and cost of the drugs. JLARC staff found six positive indicators that suggest costs savings are likely occurring due to use the PDL. However, exact savings cannot be calculated because of other cost containment measures implemented by HRSA, population and market factors, and challenges with cost savings estimation methodologies. The study concludes that for budget development purposes, the Legislature may not need specific estimates of Medicaid cost savings related to the PDL. However, it is important for the three agencies to continue to participate in the review process for designating preferred drugs.