Article Abstract

Article Abstract

Online ISSN: 1099-176X Print ISSN: 1091-4358
The Journal of Mental Health Policy and Economics
Volume 11, Issue 1, 2008. Pages: 33-47
Published Online: 25 Mar 2008

Differences in the Cost of Antidepressants Across State Medicaid Programs

Christina M.L. Kelton,^*1 Robert P. Rebelein,² Pamela C. Heaton,³ Yann Ferrand,⁴ Jeff J. Guo⁵

¹PhD, Professor of Economics, College of Business, University of Cincinnati, Cincinnati, OH, USA
²PhD, Assistant Professor of Economics, Department of Economics, Vassar College, Poughkeepsie, NY, USA
³PhD, Assistant Professor of Pharmacy Practice, College of Pharmacy, University of Cincinnati, Cincinnati, OH, USA
⁴M.S., Doctoral Student in Quantitative Analysis and Operations Management, College of Business, University of Cincinnati, Cincinnati, OH, USA
⁵PhD, Associate Professor of Pharmacoeconomics and Pharmacoepidemiology ,University of Cincinnati, Cincinnati, OH, USA

* Correspondence to: Christina M.L. Kelton, Ph.D., College of Business, University of Cincinnati PO Box 210223, Cincinnati, OH 45221-0223, USA.
Tel.: +1-513-556 2983
Fax: +1-513-556 2953
E-mail: chris.kelton@uc.edu

Source of Funding: None declared.

Abstract

The U.S. Medicaid programs spent over $2.3 billion on antidepressant drugs in 2003. This study describes that spending in detail and determines the effects of Medicaid drug policies, including preferred drug lists, prior authorization, copay systems, drug utilization reviews, and physician education, on reimbursement expense, by way of descriptive summary tables. Expenditure per capita (the burden of depression) is found to be highest in states in which the amount of annual sunshine is low; the percent of people living in rural areas is high; and the employment rate is low. Such states are seen to pursue cost-containment policies most vigorously. Expenditure per prescription is highest in states in which the population is high; the percentage of generic prescriptions is low; and there does not exist a tiered-copay system. For cost-containment programs besides cost sharing, it is the quality of the program, not its existence per se, that seems to matter.

Background: Depression is the most prevalent major mental health disorder, affecting between eight and ten percent of the population in the United States. The U.S. Medicaid programs spent in total over $2.3 billion on antidepressant drugs in 2003, across three categories of antidepressants including selective serotonin reuptake inhibitors, tricyclic antidepressants, and others. Each state has its own set of cost-containment policies with respect to antidepressants, as well as other drugs, including preferred drug lists, prior authorization policies, copay systems, drug utilization reviews, and physician and patient education.

Aims: Our objectives for this study are to describe in detail state Medicaid spending on antidepressants and to determine the magnitude and significance of the effects of Medicaid drug policies on reimbursement expense.

Methods: Data from the Centers for Medicare & Medicaid Services are used to calculate state expenditures on antidepressants and number of prescriptions for antidepressants. Policy variables are taken from a 2003 Kaiser Commission report. Additional data on state population, employment, and weather are found in Census 2000 and other government sources. Descriptive summary tables are used to explain reimbursement per capita (the per capita ``burden'' of depression) and reimbursement per prescription.

Results: Per-capita reimbursement ranges from less than $5 in Nevada and Wisconsin to over $20 in Tennessee and Maine. We find that the burden of depression is heaviest in states in which the amount of annual sunshine is low; the percent of people living in rural areas is high; and the employment rate is low. Those states in which the depression burden is heaviest are those states in which cost-containment policies are pursued most vigorously. The state of Michigan has the lowest per-prescription reimbursement ($50), followed closely by Wisconsin. Meanwhile, California, Texas, and Oklahoma have the highest reimbursement per prescription (over $75 in each of these states). Reimbursement per antidepressant prescription is highest in states in which the population is high; the percentage of generic prescriptions is low; and there does not exist a tiered-copay system.

Discussion: Of all the Medicaid policies considered, the tiered-copay system is the only policy with a statistically significant negative correlation with per-prescription cost. Since an important limitation of the study is only a single year of observation, we cannot establish the direction of causation between policy and drug cost. Another limitation of the study is that actual acquisition costs are lower than reimbursements due to manufacturer rebates. For other cost-containment programs besides cost sharing, it is the quality of the program, not its existence per se, that seems to matter. Moreover, states that have high percentages of generic drugs, regardless of policy, enjoy significantly lower costs per prescription. The results of the study also lend support to the importance of sunlight and urbanization in reducing the depression burden.

Implications for Policy and Research: Policy makers in state Medicaid programs can learn from experiences in other states. Additional research is required to ensure that the results hold up across different years and for other therapeutic classes of drugs.

Received 16 May 2007; accepted 18 December 2007