Cost-effectiveness of Medicare drug plans in schizophrenia and bipolar disorder

Medicare Part D has a drug coverage gap, which imposes risks for discontinuing medications, particularly in mental health disorders where drug costs are high. However, some beneficiaries have generic drug coverage in the gap.

To examine the health outcomes and cost-effectiveness of generic-drug coverage compared with no gap coverage in patients with bipolar disorder and schizophrenia.

Markov model-based cost-effectiveness analysis using identical hypothetical cohorts to examine drug coverage strategies.

The incremental cost-effectiveness of Part D coverage strategies was estimated, using differences in medical costs and quality-adjusted life years between plans. Coverage strategy-specific costs and hospitalization rates were obtained from 2007 Medicare data, adjusted for age, sex, race, and health status.

When comparing generic-only coverage with no gap coverage, generic-only coverage cost less and was more effective than no gap coverage, due mainly to lower hospitalization rates. In sensitivity analyses, generic-only coverage continued to be favored over no gap coverage unless generic coverage costs increased > 3% in bipolar disorder and > 5% in schizophrenia; generic coverage in the gap was also favored in probabilistic sensitivity analyses.

In Medicare Part D, generic drug coverage was cost saving compared with no coverage in bipolar disorder and schizophrenia while improving health outcomes. Policy makers and insurers might consider generic-only coverage, rather than no gap coverage, to both conserve healthcare resources and improve health.