Forecasting Medicaid Expenditures for Antipsychotic Medications

Area of Science:

• Health Economics
• Pharmacoeconomics
• Public Health Policy

Background:

• The shift towards generic second-generation antipsychotics (SGAs) presents an opportunity to lower Medicaid expenditures.
• Medicaid formulary restrictions on SGAs are a key consideration in this transition.

Purpose of the Study:

• To forecast the impact of generic antipsychotic medications on Medicaid expenditures.
• To evaluate the potential reduction in spending and its implications for formulary policies.

Main Methods:

• Utilized quarterly state-level aggregate data on Medicaid outpatient antipsychotic prescriptions (2008-2011).
• Constructed annual prescription numbers, expenditures, and costs per prescription.
• Developed expenditure forecasts for 2016 and 2019 based on generic risperidone savings, with models for constant and variable prices.
• Assessed forecast sensitivity to changes in Medicaid enrollment.

Main Results:

• Projected a decrease in annual Medicaid antipsychotic expenditures by 48.8% ($1,794 million) by 2016 and 76.5% ($2,814 million) by 2019.
• Adjustments for variable drug prices and enrollment changes had a moderate impact on the projected savings.

Conclusions:

• Medicaid antipsychotic expenditures are expected to decrease by more than half within five years.
• This significant spending reduction necessitates a reevaluation of existing formulary restrictions for SGAs in Medicaid.