COLUMBIA, S.C. - In an attempt to save millions of dollars and reform the Medicaid program, Gov. Mark Sanford on Thursday said he would seek to establish a preferred drug list.

Under such a system, a third party made up of doctors and pharmacists decides which drugs are medically necessary, efficient and affordable for patients with Medicaid or SilverCard prescription drug coverage.

If a doctor wants to prescribe a more expensive drug or one that is not on the list, he must receive prior approval from the state. It would take about 24 hours to get approval for a different drug, said HHS director Bob Toomey.

Drug companies could get their products on the list by negotiating a fee with the state and agreeing to sell their drugs at a low cost.

Rep. Rick Quinn, R-Columbia and chairman of the subcommittee responsible for writing the Medicaid budget each year, applauded the preferred drug list.

"It forces the provider system to consider the possibility of using cheaper drugs where it's appropriate," said Quinn, who has been vocal about the need for reforms to control Medicaid spending.

In South Carolina, Medicaid is a $3.6 billion program. In fiscal year 2002, the Health and Human Services Department paid about $480 million in state funds on Medicaid. From 1999 to 2002, Medicaid expenditures increased 25 percent, while the state's general fund revenues decreased 1.53 percent.

Sanford said the preferred drug list could save the Medicaid program about $12.8 million.

"I think we all ... Republicans and Democrats - have a fiduciary responsibility to make sure that we stretch every Medicaid dollar to the maximum extent possible so that we can then spend those dollars on the very real health care needs that exist here in South Carolina," Sanford said.

Pharmaceutical companies say preferred drug lists penalize Medicaid patients by restricting which drugs are available and can lead to second-class health care for patients.

But Sanford said 16 other states have preferred drug lists and they have proven to provide the same level of quality service.

The idea has bipartisan support from South Carolina lawmakers.

Democratic Gov. Jim Hodges, who was defeated by Sanford in November, first began working on the preferred drug list. He waited to submit the amendment until Sanford took office, to give the new governor time to review the plan.

"I want to give credit where credit's due," Sanford said. "This is an idea that began in the last administration. It's something that we're completing."

House Minority Leader James Smith, D-Columbia, said the plan has the support of the majority of Democrats.

"It is when we focus on the ideas and on the need out there ... and we work together that we really strive to improve South Carolina," Smith said.

Senate Finance Committee Chairman Hugh Leatherman, R-Florence, said cost-cutting measures like the preferred drug program will help the state get through this difficult budget year.