Economic Impact of Prior Authorization Policies for Atypical Antipsychotics in the Treatment of Schizophrenia

Abstract

Prior authorization (PA) policies are increasingly being used to manage atypical antipsychotic (AA) Medicaid drug expenditures; however, some studies suggest that PAs may actually lead to higher rates of treatment discontinuation and hospitalization. A decision analytic model was developed to compare the cost of schizophrenia treatment from a Medicaid perspective when a PA policy for AA is in place with the cost of no PA, over a 1-year time horizon. Deterministic sensitivity analyses were conducted to assess the robustness of the model results when the parameters were varied. A second analysis was performed to assess the incremental impact of PA on hospitalization. The base case model calculates the mean yearly total medical cost for a patient with schizophrenia to be $12,967 (SD $798) under the PA arm and $12,996 (SD $925) with no PA. Results of the probabilistic sensitivity analysis suggest that PA is likely to produce modest cost savings 56% of the time. Analysis of the incremental impact of hospitalization on treatment cost showed that just a 0.5% increase in hospitalization rate in the PA arm will make the PA arm more costly. This analysis suggests that PA is likely to produce only modest cost savings approximately half the time. Sensitivity analyses show that small increases in hospitalizations will make PA the more costly option. Rigorous analysis of the PA policy for AAs is required to ensure that attempts to reduce pharmacy spending do not increase the risk for negative medical outcomes that would offset benefits.