Cost-Offsets of New Medications for Treatment of Schizophrenia
Broad claims are frequently made that new medications will offset all or part of their costs by reducing other areas of Medicaid spending. In this paper we examine the net impact on spending for new drugs used to treat schizophrenia. We extend research in this area by taking a new approach to identification of spending impacts of new drugs. We specify and estimate models of spending on treatment of schizophrenia using 7 years of Florida Medicaid data. The estimates indicate that use of the new drugs result in net spending increases. This may be due to increased adherence to treatment.
The authors gratefully acknowledge financial support from two NIMH grants, Economic Impacts of New Drugs (R01MH069721) and Modeling Treatment Use & Effectiveness in Mental Illness (R01MH061434). We are grateful to Richard Lindrooth for constructive comments on an earlier version of this paper. We also thank Christina Fu for expert programming assistance. An earlier version of this paper was presented at the NIMH 13th Biennial Conference on Economics and Mental Health. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.