Drug benefits are the fastest growing major cost component both of private insurance and Medicaid, averaging 12.2% growth per year compared to 5.1% for total health spending (1993-1998).1 In 1997, $78.9 billion were spent on prescription drugs, representing 7% of total health care expenditures.2 More specifically, spending on the newer antidepressants such as fluoxetine, sertraline, and paroxetine increased by 240% between 1993 and 1998, representing 11.8% ($5 billion) of the total increase in drug expenditures over this time period.3
To slow the growth in pharmaceutical costs, health care payers have initiated utilization control mechanisms. Examples include restricted formularies (i.e., lists of pharmaceuticals approved for reimbursement that may include only the older, less expensive, and sometimes less effective medications), limits on the numbers of prescriptions or units allowed and prior authorization requirements for newer medications. In the case of substance abuse, many plans do not offer access to any substance abuse treatment, making pharmaceutical intervention much less likely or even impossible. To consumers, families, and mental health advocates these controls translate into denials of care.
In fact, many consumers, clinicians, and advocates believe that denying or reducing access to drugs may cost more in the long term. Instead of using effective pharmacotherapies early, consumers and advocates contend that precious time and money is wasted in older or less effective treatments. Consequently, the quality of their lives suffers. While criticism for using these practices often focuses on managed care organizations (MCOs), similar cost control measures exist in traditional insurance, including Medicaid.
New medications introduced in the last decade represent a significant advance in the effective treatment of mental illnesses. In general, the newer medications have proven efficacious in treating various mental disorders (particularly schizophrenia and major depression), with a noticeable reduction in, or absence of, the adverse side effects often associated with the older generation of psychiatric medications. These agents include Selective Serotonin Reuptake Inhibitors (SSRIs), other new generation antidepressants (e.g., nefazadone, venlafaxine, bupropion, mirtazapine), and atypical antipsychotics (e.g., risperidone, olanzapine, quetiapine). More specifically, newer generation drugs feature real-world effectiveness, ease of dosing, and improved safety.
Timely use of the most effective drug therapies can reduce the need for inpatient treatment and minimize the disabling effects of severe illnesses and disorders, such as schizophrenia and major depressive disorder. Furthermore, the milder side effects of many of the newer medications may ensure better compliance with therapy. Together, these factors can result in marked improvement in the productivity and quality of life for both the consumer and the consumer's family.
However, these newer medications are often substantially more expensive than the medications they are intended to replace. For example, the average wholesale price (AWP) for the antidepressant fluoxetine is $150.10 for a 30-day supply of an average therapeutic dose while a 30-day supply of the older antidepressant, amitriptyline, lists between $3.00 for a generic version and $5.00 for the branded version.
Although not formally related, this study benefited from prior work conducted by The Lewin Group on this topic for the Substance Abuse and Mental Health Services Administration (SAMHSA). In 1998, The Lewin Group conducted a trend analysis concerning the status of pharmacy benefits for behavioral health under public insurance.4 In that study, representatives from primary stakeholder groups were interviewed to determine the principal barriers in place that act to restrict access to the newer psychotropic medications. The trend paper summarized those findings and made an assessment of existing data sources and published literature to determine the extent to which the issues identified by the stakeholders could be (or had been) addressed from existing sources.
Until the present study, however, no primary research had been conducted on these questions. Most of the complaints were based on anecdotal experience. Nevertheless, such experiences did raise a clear policy concern as to whether health care payers have gone too far in controlling the utilization of pharmaceuticals. This is especially true as managed care programs assume increasing responsibility for caring for the severely mentally ill, and as the issue of mental health parity and the scope of desirable benefits are publicly debated and often legally mandated in various forms.