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Drug Costs

Managing Psychotropic Drug Costs: Will Formularies Work?

PROLOGUE: Spending for prescription drugs—once the fastest-growing component of health care spending in the United States—has taken second place to hospital costs but still continues to increase rapidly. In 2002, for example, prescription drug spending rose 13.2 percent over its 2001 level, down from a high of 18.4 percent in 1999. Within the broader category of prescription drugs, however, some of the fastest-growing drugs are psychotropic medications, especially new classes such as selective serotonin reuptake inhibitors (SSRIs) and atypical antipsychotics.

Formularies, or lists of prescription drugs, are one of many tools that insurance companies and other payers use to control spending for prescription drugs. Several types of formularies are in use: "open" formularies, which list the drugs an organization favors and typically offer doctors no incentives to prescribe from that list; "closed" formularies, which list the only drugs an organization will cover (physicians can ask for waivers from that formulary if they believe that a non-covered drug would produce the best results for a given patient); and "incentive" or tiered formularies, which require lower patient cost sharing for listed drugs but still allow other drugs to be covered. Most formularies in use today are three-tier formularies.

In this paper Haiden Huskamp explains that in the past payers have been reluctant to restrict the choice of psychotropic drugs through the use of formularies, because these drugs play a pivotal role in treating severe mental illness and allowing patients to return to productive life. However, as the price tag for this class of drugs continues to rise, it becomes a natural target of cost containment for insurers and pharmacy benefit managers. Huskamp examines whether the use of formularies for psychotropic drugs has promise or whether it has the potential to harm patients and reverse some of the remarkable progress in mental health treatment that is partially attributable to the broad use of these drugs.

The author is an assistant professor of health economics in the Department of Health Care Policy at Harvard Medical School. She holds a doctoral degree in health policy from Harvard and received a Career Development Award from the National Institute of Mental Health, focused on the economics of psychotropic drug use.

Abstract

 
Payers of pharmaceutical benefits are increasingly turning to drug formularies in an attempt to control rising pharmacy costs, including those for psychotropic drugs. In this paper I examine several issues that policymakers should consider when addressing formulary design for psychotropic drugs: heterogeneity within mental health disorders and limited information about treatment effectiveness for individual patients; the potential for plans to try to use formularies to avoid adverse selection and implications for psychotropic coverage; the interaction of Medicaid formulary policy and manufacturers’ incentives for psychotropic innovation; and incentives created by mental health institutions that decrease formularies’ potential effectiveness in controlling psychotropic drug costs.

Traditionally, mental health care has been viewed as somewhat different from general medical care, and the institutional arrangements governing the financing and delivery of mental health services reflect this.³ Some have questioned whether psychotropic drugs should also be treated differently when drug formularies are being designed, instead of applying formulary designs uniformly across drug classes.⁴ I argue that several characteristics of the organization and financing of mental health services and the nature of mental illness are likely to reduce the effectiveness of formularies at controlling costs for psychotropic drugs, and I discuss issues that public and private policymakers should consider when designing formularies for these drugs. Although most of these issues are not unique to psychotropic medications, some might be particularly problematic for these classes of drugs.

Innovation And Rising Mental Health Drug Costs

Top Innovation And Rising Mental... Goals For Formularies Use Of Formularies For... Key Issues Associated With... Implications For Payers And... Editor's Notes NOTES

 
The past quarter-century has brought dramatic advances in the treatment of mental illness.⁵ Several important psychotherapies were developed, but many of the key innovations were psychotropic drugs, including selective serotonin reuptake inhibitors (SSRIs), other new-generation antidepressants (such as Wellbutrin, Effexor, and Remeron), and atypical antipsychotics. Many of the new drugs proved to be equally efficacious or more easily tolerated, or both, for most patients than were drugs previously available to treat the same disorders (for example, tricyclic antidepressants versus SSRIs).

Spending for psychotropic drugs has risen dramatically in recent years, in part because of these innovations.⁶ Using Medstat MarketScan data on twenty-two large self-insured employers, Tami Mark and Rosanna Coffey found that psychotropic drug spending increased 8.9 percent annually during 1992–1999. Among these employers, psychotropic drug spending as a share of total mental health spending more than doubled, from 22 percent in 1992 to 48 percent in 1999.⁷ Rapidly rising spending for psychotropic drugs, particularly antipsychotics and antidepressants, is a growing concern for state Medicaid programs.

Goals For Formularies

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Payers of pharmacy benefits have two primary goals for formularies. One is to encourage patients and their physicians to choose lower-cost drugs by providing financial incentives in the form of lower cost sharing for drugs preferred by the plan. For example, a three-tier formulary requires the lowest copayment for generic drugs in tier 1, a higher copayment for preferred brand-name drugs in tier 2, and the highest copayment for brand-name drugs not preferred by the plan in tier 3. There is ample evidence that consumers respond to the level of cost sharing required when making decisions about their use of prescription drugs.⁸

A payer’s second goal is to procure drugs, particularly more costly brand-name drugs, from manufacturers at a lower price by making the payer’s demand for brand-name drugs more "price-elastic," or responsive to price.⁹ To create brand loyalty and make consumers (and their physicians, acting as their agents) less sensitive to the relative prices of different drugs, manufacturers try to differentiate their brand-name drug from other drugs used to treat the same conditions. They do this through research and clinical trials as well as promotional activities such as direct-to-consumer (DTC) advertising and physician detailing. If their differentiation strategies are successful, manufacturers will have little incentive to compete on the basis of price. Payers hope to offset these differentiation strategies by using incentive formularies. By demonstrating the ability to steer prescription volume in a class toward a subset of drugs that have lower consumer cost sharing, a payer creates bargaining power with manufacturers. The result is typically higher discounts or rebates from manufacturers as they compete on the basis of price to ensure that their drug is on the preferred list.

Drug class definitions. Two factors that affect the strength of incentives faced by patients, and thus the ability for payers to move market share, are the definition of drug classes and the differences in cost sharing between preferred and non-preferred drugs. First, the more heterogeneous the drugs in a class are, the less sensitive to their relative prices consumers are likely to be, and the harder it could be to shift prescribing and obtain discounted prices. As a result, how a payer defines a drug class on the formulary is important. For instance, a payer can define a class narrowly (for example, SSRIs) or more broadly (for example, antidepressants). Drugs within the class of SSRIs will be more therapeutically similar than drugs within the broader class of antidepressants.

Cost-sharing differences. Second, the greater the differences in cost sharing between preferred and nonpreferred drugs, the stronger the incentives for patients and the greater the payer’s ability to shift prescribing behavior. Under a closed formulary, enrollees have no coverage for drugs that are not on the preferred list, which creates a strong incentive to choose the preferred agents. In 1997 the Veterans Health Administration (VHA) adopted a national formulary that closed a small subset of drug classes, limiting coverage to one or two drugs in the affected classes unless a waiver was obtained by the physician. Two years after the formulary’s adoption, market share for covered drugs in the closed classes had risen between thirty-five (angiotensin-converting enzyme, or ACE, inhibitors) and eighty (proton pump inhibitors) percentage points.¹⁰ Because a three-tier formulary provides at least some coverage for nonpreferred drugs, the incentives for consumers to use preferred agents are not as strong as those provided by a closed formulary, so three-tier formularies are not likely to move as much market share as closed formularies do.

Use Of Formularies For Psychotropics

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In setting formulary policy, any gains in terms of price discounts must be weighed against the potential costs of restricting drug choice. Traditionally, payers have been reluctant to restrict choice of psychotropic drugs through the use of formularies because of the importance of these drugs in the treatment of mental disorders and concerns that patients often respond quite differently to different drugs. For example, the VHA decided not to close the class of SSRIs because of these concerns. Also, the VHA found that the threat of class closure alone allowed the VHA to obtain sizable discounts from manufacturers.¹¹ Another example is the Florida Medicaid program, which exempts most psychotropic classes from prior authorization requirements and the state’s preferred drug list. However, perhaps because of continued cost pressures for both public and private payers, many payers have become less cautious about using incentive formularies for psychotropic drugs. For example, the major health plans and PBMs serving the California market used similar restrictions for SSRIs as for other commonly prescribed drug classes in the fall of 2000.¹² Seven of the ten organizations covered only two or three of the SSRIs as preferred agents (Exhibit 2). A standard formulary product of Medco Health Solutions, one of the largest PBMs in the country, designates Paxil, Zoloft, and fluoxetine (the generic form of Prozac) as preferred drugs for the SSRI class, while Celexa, Lexapro, Prozac weekly, Luvox, and the brand-name version of Prozac are considered nonpreferred agents.¹³

Key Issues Associated With Formulary Use For Psychotropics

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Several characteristics of mental disorders, psychotropic drugs, and the structure of the mental health care financing system are likely to influence the potential effectiveness of formularies at controlling psychotropic drug costs and the implications of formulary use for patients. These include (1) biological heterogeneity within mental disorders; (2) the potential for health plans to use restrictive formularies as a tool for avoiding adverse selection on the part of those with chronic mental illness; (3) the interaction of Medicaid drug policy and manufacturers’ incentives for innovation; and (4) the unique characteristics of key mental health institutions, including managed behavioral health care carve-outs. The first three issues also could apply to other illnesses and the drugs used to treat them; the fourth is unique to mental illness and psychotropic drugs.

Heterogeneity within mental illnesses. There is substantial biological heterogeneity within most mental disorders.¹⁴ Consider the case of depression. Although several drug classes are used to treat depression (for example, SSRIs, monoamine oxidase inhibitors, and tricyclic antidepressants), I focus here on one of the more commonly used classes, SSRIs, for simplicity.

Many randomized trials have found that various SSRIs have similar effectiveness overall, but drugs might not be equally effective for an individual patient.¹⁵ Prior studies have shown that failure to respond to one SSRI or having severe side effects does not mean that the patient will have the same experience with another SSRI.¹⁶ At this point we do not fully understand the mechanisms of action for various antidepressant medications, nor can we predict which drug will be the best match for a given patient, because of the lack of specific biological markers to distinguish the different subtypes.¹⁷

For a subset of patients, there are indications that specific psychotropic medications could have a greater likelihood of response and tolerability based on clinical characteristics such as psychiatric comorbidities, medical comorbidities that could be exacerbated by psychotropic medication side effects, or family member history of response to a particular psychotropic agent.¹⁸ While these clinical characteristics might guide a clinician to select a particular type of first-line drug treatment, for many patients the best treatment match is not clear, and treatment decision making is a process of "trial and error."

Because of the difficulty of finding the right treatment match, some patients and their physicians will be less willing to switch to preferred drugs with lower cost sharing after formulary implemention than they would be for drugs that treat more biologically homogeneous conditions. For example, patients with major depression who have responded well to a particular SSRI that is no longer preferred by their plan will be less sensitive than first-time SSRI users to copayment differences among the tiers and therefore will be less likely to switch to a preferred drug with lower cost sharing. Depending on the relative size of these groups of patients, a payer might not be able to move much market share for SSRIs. If so, manufacturers will be less willing to negotiate large discounts, and formularies are less likely to be effective at controlling costs for SSRIs relative to drugs that treat more homogeneous conditions. Also, if patients and their physicians are unwilling to switch to preferred drugs with lower cost sharing because of concerns about treatment matching, implementation of an incentive formulary is likely to result in a shifting of costs to patients, as patients pay the higher copayments associated with nonpreferred drugs.

Heterogeneity within disorders is not unique to mental health conditions. Other health conditions, such as essential hypertension, also have a high degree of biological heterogeneity.¹⁹ Like mental disorders, these illnesses involve an element of "trial and error" in prescribing decisions for at least a subset of patients because of the variability across patients in response to different drugs.

Formularies as a possible tool for selection. There is extensive evidence that competitive pressures have led health plans to restrict coverage of specialty mental health services in an attempt to avoid adverse selection.²⁰ Adverse selection could be particularly problematic for mental health care for two reasons: (1) the high expenditures (both for mental health and other health care services) incurred by people with mental illnesses, which creates an incentive for capitated plans to try to avoid people with chronic mental illness; and (2) the predictability of spending from year to year because of the chronic nature of the conditions.

Like mental health specialty care, drug spending is also highly predictable, particularly for people who take medications for chronic conditions.²¹ This makes coverage of prescription drug benefits a potential target for efforts by plans to avoid attracting "sicker" or higher-cost enrollees. Copayment levels are typically uniform across drug classes, but plans could, in theory, make formulary coverage of certain drug classes more restrictive in an attempt to avoid adverse selection. Adverse selection is more likely to be an issue for drug classes that treat illnesses where treatment matching often involves trial and error. The reason is that once a patient finds a good treatment match, the patient and his or her clinician could be less willing to consider switching medications, and the patient could be more likely to seek a plan with generous coverage of those drugs. For example, a person with schizophrenia who responds well to Zyprexa, perhaps after unsuccessfully trying other antipsychotic medications, will be more likely to avoid a plan with a closed formulary that excludes coverage of Zyprexa, all else being equal.

In the private insurance market, competitive pressures to avoid enrollees with higher expected spending could lead the market to provide an inefficiently low level of coverage by imposing tight formulary restrictions for psychotropics. There is no evidence that formularies are more restrictive for psychotropic classes than for other classes, but the incentive exists for plans to limit coverage in this way.

Medicaid formulary use and incentives for innovation. Medicaid is responsible for a large proportion of total spending for certain psychotropic drug classes. For example, it was responsible for 52 percent of spending on antipsychotics and approximately 67 percent of antipsychotic prescriptions in 2001.²²

In recent years states have been adopting a variety of cost containment strategies to try to control rising prescription drug costs.²³ For example, the majority of state Medicaid programs use prior authorization programs that require providers to obtain authorization to use a drug that is not on the preferred list.²⁴ Several states have recently tried to use preferred drug lists that offer manufacturers an exemption from prior authorization requirements in exchange for discounts, although some of these programs are now being challenged in court.²⁵

For drug classes where Medicaid pays for a small proportion of total utilization, changes in Medicaid pricing policies or adoption of cost containment tools such as preferred drug lists will not have a big effect on manufacturers’ research and development (R&D) investment decisions. In cases such as that of antipsychotic drugs, where Medicaid dominates the market, one must begin to consider the potential threat to R&D expenditures when making pricing policy changes.²⁶ Manufacturers might be less interested in investing substantial resources in R&D for future antipsychotic agents if Medicaid uses stringent pharmacy cost containment techniques that could reduce potential revenue from a new drug in this class.

Unique characteristics of mental health institutions. Under a managed behavioral health care carve-out, a common financing mechanism for mental health services, a health plan or employer separates risk for mental health and substance abuse (MHSA) specialty care from the risk for other health care services and contracts with a specialty managed care vendor for the management of the MHSA benefit only. Managed behavioral health care carve-out vendor contracts typically cover only specialty inpatient and outpatient treatments and do not place the vendor at financial risk for psychotropic drugs. As a result, such vendors have no incentive to control psychotropic drug costs. In fact, if vendors face financial risk for specialty inpatient and outpatient care only, they have an incentive to shift costs onto the pharmacy benefit by encouraging the use of psychotropic drugs instead of psychotherapy in cases where the two are somewhat substitutable.²⁷ For example, vendors could respond to this incentive by using stricter utilization review procedures for psychotherapy and more lenient review procedures for medication management visits. There is evidence that carve-out adoption has been associated with an increase in prescribing of mental health drugs in private health plans and with a decrease in psychosocial treatments for Medicaid patients diagnosed with schizophrenia.²⁸ In addition, plans and PBMs do not share with managed behavioral health care vendors the rebates they receive from manufacturers of psychotropic drugs, which would provide vendors with an incentive to encourage clinicians in their network to steer patients toward preferred drugs where appropriate.

Given a vendor’s lack of incentives to control psychotropic drug costs, it is not surprising that they do not typically pass down either financial (bonuses) or non-financial (profiling a provider’s treatment patterns against those of his or her peers) incentives for cost-effective prescribing to their network clinicians. By contrast, on the general medical side, plans have a strong incentive to encourage cost-effective prescribing by the clinicians with whom they contract because plans face financial risk for pharmacy costs and receive rebates from manufacturers (either directly or through a PBM if they contract with one) for steering prescribing toward preferred drugs. As a result, plans are more likely to give clinicians financial or nonfinancial incentives for controlling costs than managed behavioral health care vendors are. For example, in attempting to control pharmacy costs, a plan might withhold 5 percent of a primary care physician’s payments or might profile clinicians on their prescribing patterns. The unique institutional arrangements among plans, carve-out vendors, and clinicians provide another reason why formularies are less likely to be effective at controlling psychotropic drug costs than they are for many other drug classes.

Implications For Payers And Policymakers

Top Innovation And Rising Mental... Goals For Formularies Use Of Formularies For... Key Issues Associated With... Implications For Payers And... Editor's Notes NOTES

 
Payers are adopting incentive formularies to secure discounts from manufacturers and to make consumers more cost-conscious in their prescription drug choices. With respect to psychotropic drugs, the major policy questions are how well these arrangements will achieve the payer’s goals and how formularies could be structured to avoid inhibiting effective treatment matching.

Likely outcomes of incentive formularies. Because of the biological heterogeneity within mental disorders, many patients and their clinicians will be unwilling to switch medications that are working well, so payers will have greater difficulty moving significant market share for these drugs. As a result, incentive formularies are not likely to result in large discounts from manufacturers. In theory, increasing cost sharing for nonpreferred drugs could increase efficiency of prescribing from an economist’s point of view in that only people (with the help of their clinician) whose expected marginal benefit from the nonpreferred drug exceeds the cost-sharing difference will continue using that drug. However, this outcome is dependent on physicians’ and consumers’ having good information about the likely effectiveness of various drugs for a particular type of patient. Given that many patients will not be willing to switch, an incentive formulary could primarily serve to shift costs from the plan to the patient, increasing the out-of-pocket burden for some people with chronic mental illness.

Stepped formularies. Given the lack of evidence to inform initial treatment choice for many mental disorders, a stepped formulary that requires use of a generic drug as a first-line treatment for new users is a reasonable approach if formulary decisions are informed by clinical evidence. An example would be a stepped formulary with fluoxetine as the first-line treatment for new antidepressant users. This would have to be accompanied by a relatively flexible waiver process for patients who do not respond to the generic option(s) and for the subset of patients for whom there is reason to believe that an alternative first-line medication would be most effective.

It is important to note the trade-off between the flexibility of the waiver process and the level of discounts and rebates that can be obtained from manufacturers. With a more flexible waiver process, a payer is less likely to be able to ensure the manufacturer a given level of market share if the manufacturer’s drug is selected as a preferred agent. As a result, manufacturers will be less willing to offer deep discounts or large rebates to the payer.

Financial incentives for generic drug use. The concentration of generic entry in the next few years raises the hope that payers may be able to achieve some level of cost savings without limiting therapeutic choice by using formularies that provide financial incentives for patients to use generic versions of brand-name drugs that have lost patent protection. For example, among the remaining brand-name SSRIs, Serzone is expected to lose patent protection in 2003, Celexa in 2004, Paxil in 2005, and Zoloft in 2006. Prozac, Luvox, and Wellbutrin have already lost patent protection.

However, the extent to which a strategy relying on the use of less costly generic options will control costs depends on several factors, including when new psychotropics enter the market, the extent to which new drugs represent a major innovation over drugs that have lost patent protection, the outcomes of ongoing legal challenges to patent expiration, and generic pricing in the future. Prices of generic drugs rose twice as fast as brand-name drug prices in 2001, for several reasons, including consolidation among generic drug manufacturers and the fact that other parties in the drug distribution system (PBMs, wholesalers, and pharmacies) might not be passing on full savings from generic drug use to the payers.²⁹ As a result, the magnitude of savings that can be achieved by increasing use of generic drugs is uncertain.

Obstacles of financing and organization. An additional reason why formularies are less likely to be able to control rising psychotropic drug costs is the unique institutional arrangements for mental health care financing and organization. Payers might consider changing managed behavioral health care vendor contracts to support their formulary goals. For example, the contracts between payers and vendors could include performance standards with small bonuses for the vendors based on cost-effective and guideline-concordant prescribing, or the payer could share rebates from manufacturers with the vendor. As a result, the vendor would be more likely to encourage cost-effective prescribing in appropriate cases (for example, first-line treatment for patients with no prior antidepressant use and where the clinician has no indication that any particular drug is the best match) by their network clinicians through profiling or other nonfinancial incentives. These types of contractual and management changes should help align the incentives of the payer, the carve-out vendor, and the clinicians making the prescribing decisions for a large proportion of psychotropic drugs without providing strong incentives for poor quality of care.³⁰

Competitive pressures and Medicaid. Policymakers should be aware of two other issues relevant to formulary coverage of psychotropics. First, competitive pressures and financial incentives could lead to inefficient coverage levels or "overrationing" of psychotropic drugs by plans seeking to avoid adverse selection, although there is no evidence of this happening to date. Most parity proposals, which typically focus on parity in nominal benefits for inpatient and outpatient mental health care, do not address this issue. The difficulty of assessing parity in formulary coverage mirrors the difficulty of assessing parity in inpatient and outpatient mental health care when supply-side rationing tools such as utilization review are used.³¹ Second, because Medicaid is a particularly important payer of psychotropic drug costs, the government needs to think carefully about Medicaid’s use of preferred drug lists and other cost containment techniques. It needs to balance potential cost savings that could be achieved by their use with the implications of their use for the pharmaceutical industry’s incentives to invest in future innovations to treat mental illness.³²

Formularies for nonpsychotropics. Finally, given the fact that several of the characteristics of psychotropic drugs that are important considerations for formulary and benefit design are not unique to psychotropics raises a more general question of how formularies should be designed for drug classes that treat biologically heterogeneous illnesses. Public and private payers should consider using different formulary designs for different drug classes, such as the system used by the VHA. After a thorough review of the literature on a drug class by a committee of physicians and pharmacists, the VHA chooses one of three formulary classifications: (1) "closed," whereby a waiver is required to use a drug not on the list; (2) "preferred," whereby physicians are encouraged to select a particular drug but are not required to obtain a waiver to use others; or (3) "open," with no formulary restrictions.³³ For example, a payer could choose a closed formulary with one or two drugs for the class of proton pump inhibitors and a three-tier structure for antidepressants, allowing patients to receive some level of coverage for nonpreferred drugs.

Payers are increasingly turning to incentive formularies to control rising pharmacy benefit costs, including rapidly rising psychotropic drug costs. However, because of the characteristics of mental disorders and the organization and financing of the mental health care system, formularies are not likely to control psychotropic drug costs as effectively as they control costs for certain other drug classes and could negatively affect the treatment-matching process, depending on formularies’ structure. Public and private policymakers should consider these issues when designing formularies for psychotropic drugs to ensure that the formularies do not have deleterious effects on patients with mental illness and do not risk reversing the tremendous gains in mental health treatment made over the past few decades.

Editor's Notes

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The author gratefully acknowledges financial support from the National Institute of Mental Health (Grant no. 1 K01 MH66109), the Agency for Healthcare Research and Quality (Grant no. 5 P01 HS10803-2), and the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) program. The author is grateful to Ernst Berndt, Alisa Busch, Rena Conti, Richard Frank, Howard Goldman, Thomas McGuire, Andrew Nierenberg, and three anonymous reviewers for their many constructive suggestions.

NOTES

Top Innovation And Rising Mental... Goals For Formularies Use Of Formularies For... Key Issues Associated With... Implications For Payers And... Editor's Notes NOTES

 

1. For example, National Institute for Health Care Management Research and Educational Foundation, Prescription Drug Expenditures in 2001: Another Year of Escalating Costs (Washington: NIHCM Foundation, May 2002). In Exhibit 1, psychotropic drugs appear in bold type.
2. Ibid.
3. R.G.Frank and T.G. McGuire, "Economics and Mental Health," in Handbook of Health Economics, Vol. 1B, ed. A.J. Culyer and J.P. Newhouse (New York: Elsevier, 2000), 893–954.
4. See, for example, P.L.Hensley and H.G. Nurnberg, "Formulary Restriction of Selective Serotonin Reuptake Inhibitors for Depression: Potential Pitfalls," Pharmacoeconomics 19, no. 10 (2001): 973–982.[Medline]
5. U.S. Department of Health and Human Services, Mental Health:A Report of the Surgeon General (Rockville, Md.: DHHS, 1999).
6. E.R.Berndt, "Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price," Journal of Economic Perspectives (Fall 2002): 45–66.
7. T.L.Mark and R.M. Coffey, "What Drove Private Health Insurance Spending on Mental Health and Substance Abuse Care, 1992–1999?" Health Affairs (Jan/Feb 2003): 165–172.
8. See, for example, A.Leibowitz, W.G. Manning, and J.P. Newhouse, "The Demand for Prescription Drugs as a Function of Cost-Sharing," Social Science and Medicine 21, no. 10 (1985): 251–277.
9. R.G.Frank, "Prescription Drug Prices: Why Do Some Pay More than Others Do?" Health Affairs (Mar/Apr 2001): 115–128.
10. Institute of Medicine, Description and Analysis of the VA National Formulary (Washington: National Academies Press, June 2000).
11. Ibid.
12. WilliamM. Mercer Inc., Prescription Drug Coverage and Formulary Use in California: Different Approaches and Emerging Trends, May 2001, www.chcf.org/topics/view.cfm?itemID=12658 (18 July 2003).
13. Medco Health, "Information for Healthcare Professionals," Preferred Prescriptions Formulary, www.medcohealth.com (13 June 2003).
14. A.J.Rush and D.J. Kupfer, "Strategies and Tactics in the Treatment of Depression," in Treatments of Psychiatric Disorders, ed. G.O. Gabbard (Washington: American Psychiatric Publishing, 2001), 1427–1428.
15. G.Simon, "Choosing a First-Line Antidepressant: Equal on Average Does Not Mean Equal for Everyone," Journal of the American Medical Association 286, no. 23 (2001): 3003–3004.[Free Full Text]
16. See, for example, M.E.Thase et al., "Fluoxetine Treatment of Patients with Major Depressive Disorders Who Failed Initial Treatment with Sertraline," Journal of Clinical Psychiatry 58, no. 1 (1997): 16–21[ISI][Medline]; and W.A.Brown and W. Harrison, "Are Patients Who Are Intolerant to One Serotonin Selective Reuptake Inhibitor Intolerant to Another?" Journal of Clinical Psychiatry 56, no. 1 (1995): 30–34.
17. P.L.Delgado and A.J. Gelenberg, "Antidepressant and Antimanic Medications," in Treatments of Psychiatric Disorders, ed. G.O. Gabbard (Washington: American Psychiatric Publishing, 2001), 1137–1180.
18. Ibid.; and Rush and Kupfer, "Strategies and Tactics."
19. A.V.Chobanian et al., "The Seventh Report of the Joint National Committee on Prevention, Detection, Evaluation, and Treatment of High Blood Pressure: The JNC 7 Report," Journal of the American Medical Association (21 May 2003): 2560–2572; and B.J.Materson et al., "Single-Drug Therapy for Hypertension in Men: A Comparison of Six Antihypertensive Agents with Placebo," New England Journal of Medicine (1 April 1993): 914–921.
20. For a general discussion, see Frank and McGuire, "Economics and Mental Health"; and R.G.Frank, J. Glazer, and T.G. McGuire, "Measuring Adverse Selection in Managed Health Care," Journal of Health Economics 19, no. 6 (2000): 829–854.[CrossRef][ISI][Medline]
21. R.P.Ellis, "The Effect of Prior-Year Health Expenditures on Health Coverage Plan Choice," in Advances in Health Economics and Health Services Research, Vol. 6, ed. R.M. Scheffler and L.F. Rossiter (Greenwich, Conn.: JAI Press, 1985), 149–170.
22. R.G.Frank and R. Conti, "Mental Health Policy and Psychotropic Drugs" (Issue paper prepared for the President’s New Freedom Commission on Mental Health, January 2003).
23. Kaiser Commission on Medicaid and the Uninsured, Medicaid and the Prescription Drug Benefit: Cost Containment Strategies and State Experiences (Washington: Kaiser Commission, September 2002).
24. Ibid.
25. Ibid.
26. Frank and Conti, "Mental Health Policy and Psychotropic Drugs"; and F.M. Scherer, "The Pharmaceutical Industry," in Handbook of Health Economics, ed. Culyer and Newhouse, 1297–1336.
27. See, for example, R.G.Frank, H.A. Huskamp, and H.A. Pincus, "Aligning Incentives in the Treatment of Depression in Primary Care with Evidence-Based Practice," Psychiatric Services (May 2003): 682–687; D.Ling, R.G. Frank, and E.R. Berndt, "Behavioral Health Carve-Out Implementation and Diffusion of New Psychotropic Medications in the Medicaid Population" (Unpublished paper, Harvard University, December 2002); E.R.Berndt, R.G. Frank, and T.G. McGuire, "Alternative Insurance Arrangements and the Treatment of Depression: What Are the Facts?" American Journal of Managed Care 3, no. 2 (1997): 135–143[ISI][Medline]; and S.H.Busch, "Specialty Health Care, Treatment Patterns, and Quality: The Impact of a Mental Health Carve-Out on Care for Depression," Health Services Research 37, no. 6 (2002): 1583–1602.[CrossRef][ISI][Medline]
28. Busch, "Specialty Health Care"; and A.B. Busch, R.G. Frank, and A.F. Lehman, "The Effect of a Managed Behavioral Health Care Carve-Out on Quality of Care for Patients Diagnosed with Schizophrenia" (Working paper, Harvard University, 2003).
29. M.Freudenheim, "As Patents on Popular Drugs End, Costs for Generics Show a Surge," New York Times, 27 December 2002.
30. Primary care physicians and other medical specialists also prescribe psychotropic drugs.
31. M.A.Burnam and J.J. Escarce, "Equity in Managed Care for Mental Disorders," Health Affairs (Sep/Oct 1999): 214–225.
32. Frank and Conti, "Mental Health Policy and Psychotropic Drugs."
33. IOM, "Description and Analysis of the VA National Formulary."

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