Overall spending and utilization
From 1999 to 2005, spending on and use of antipsychotics grew at a rapid pace, reflecting increased utilization and a shift to the newer atypicals (). For the average Medicaid program, annual spending per enrollee on antipsychotic agents increased by 106 percent net of general inflation, from $82 per enrollee in 1999 to $169 in 2005 (2008$), while the number of prescriptions per enrollee increased by 29 percent, from 0.54 per enrollee to 0.70. During the same period, spending on antidepressants grew by 33 percent while antidepressant prescriptions grew by 53 percent. shows that both atypical antipsychotics and antidepressants had a number of new drug introductions during this period. However, many of the new antidepressant drugs were generic versions of existing branded products, while the new antipsychotics were more likely to be new molecular entities.
Annual Psychiatric Drug Utilization in 30 State Medicaid Programs, 1999-2005
Per Beneficiary Medicaid Spending and Drug Introductions, 1999-2005
Utilization management by Medicaid programs also increased dramatically from 1999 to 2008 (), The most common type of utilization management is prior authorization, which, by 2008, was used by 63 percent of states for atypicals, 77 percent of states for antidepressants, and 37 percent of states for anticonvulsants. The number of drugs requiring prior authorization also increased over the period--from 1 to 3.6 out of the 10 drugs covered by our survey. The variation is also substantial—most required prior authorization from 1 to 7 drugs, and one state required prior authorization for all 10 drugs. The drugs most commonly subject to prior authorization were Clozaril, orally disintegrating tablets of Abilify and Zyprexa, and the injectable form of Risperdal. Conventional Abilify and Zyprexa also commonly require prior authorization. The criteria for granting authorization varied as well--from a failed trial of preferred agents to documentation of clinical necessity.
Medicaid Regulation of Psychiatric Drugs in 30 States, 1999-2008
We also found that a greater absolute number of antidepressants than atypicals are subject to prior authorization (). There are, however, more brand name drugs and various extended release forms in the antidepressant class. If we group the drugs by active ingredient and only count that ingredient as subject to prior authorization if all drugs with that ingredient are subject to it, then the average number of atypicals on prior authorization is 2 out of 6 ingredients, and 2 out of 9 ingredients for antidepressants. Anticonvulsants are less frequently subject to prior authorization than the other two drug classes. However, three states restrict prescription of anticonvulsants for treatment of non-seizure disorders. Although we do not show data for regulation of typical antipsychotics, they are also less frequently subject to prior authorization than are atypicals.
The trend in the use of quantity limits is similar, as their use rose from 3 percent of states in 1999 to 63 percent in 2008 for atypicals. Interestingly, there is little overlap between the states employing prior authorization and the states employing quantity limits, as more than 90 percent of states employ at least one of the two techniques.
Step therapy is another fairly common technique, and, although it was not used prior to 2000, 25 states were using it by 2008. Dose restriction also rose from insignificance to use by 7 percent of states for atypicals and 30 percent of states for antidepressants by 2008. Dose restriction appears to be used by some state Medicaid programs to enforce a de facto pill-splitting policy (by requiring 30mg tablets to be bought rather than 10mg tablets) where that is cost-reducing. There were a number of less common techniques including restrictions on duplicate therapy, age edit, and specialty edit.
Utilization and regulation
The Medicaid programs that instituted prior authorization experienced lower growth in spending. In the eleven states instituting prior authorization between 1999 and 2008, atypical use per enrollee rose by 14 percent--compared with 19 percent for the other 19 states. Interestingly, there is no significant correlation between the imposition of prior authorization and initial levels of spending (results available upon request)—suggesting that while States may impose prior authorization for various reasons, levels of spending across States was not one of them.
Although prior authorization reduces use of atypicals, it does not seem to induce substitution to conventional antipsychotics. All but one of the thirty survey states experienced a decrease in conventional antipsychotic use per-enrollee (not shown). States which instituted prior authorization on atypical antipsychotics experienced faster declines in conventional antipsychotic use (p=0.06; not shown), which – as shown in the regression analysis—suggest overall reductions in use of psychiatric medications.
To confirm these results, we performed fixed effects regression analyses of utilization on prior authorization (reported in Appendixes A and B
). These regressions take into account state effects, time effects, drug effects, all of the two-way interactions among these, the effects of prior authorization on each drug, the effects on each drug of having other drugs in its class being on prior authorization (i.e. substitution effects). We also accounted for the existence of drug life cycle effects. These are systematic changes in drug use over the course of the drug’s lifetime on the market. Typically, newly introduced branded drugs have low consumption which builds up over time. Then, as competitor drugs in the same and related classes enter and especially as generic competitors enter, the branded drug’s demand falls. These effects are accounted for in our regression analyses via the use of drug-time fixed effects. In some regressions, we also include binary indicators for the other major regulations (quantity limits, step therapy, dose restriction, and duplicate therapy) to verify that the results are robust.
Two key findings emerge from this analysis. First, prior authorization dramatically reduces consumption of the targeted drugs (). Second, prior authorization has spillovers outside the targeted drugs, with the result that the overall use of psychiatric drugs falls. That is, imposing prior authorization on one atypical antipsychotic drug reduces consumption of antipsychotics overall, demonstrating that any substitution is incomplete. Specifically, subjecting the leading atypical to prior authorization reduces the number of prescriptions for that atypical agent by 35 percent (). Individuals who are discouraged from using this drug may either substitute to another antipsychotic drug, or forego antipsychotic drug treatment altogether. If they substitute to other drugs, then the overall use of antipsychotics should not fall. However, overall antipsychotic use does fall, by about 4.5 percent. More stringent policies have larger effects. Imposing prior authorization on the two leading atypicals reduces consumption of the targeted drugs by about the same amount (35 percent), but overall use falls by 6 percent. Thus, any substitution from atypicals to typicals in response to prior authorization must be incomplete.
Effect of Prior Authorization on Utilization of Antipsychotics