1005 — A Cost-Benefit Analysis of Higher Medication Copayments in Veterans with Schizophrenia
Zeber JE (VERDICT, San Antonio), Copeland LA
(VERDICT, San Antonio), Miller AL
(UTHSCSA, Psychiatry), Valenstein M
(SMITREC, Ann Arbor), Leykum L
(VERDICT, San Antonio)
Objectives:
Medication non-adherence is already a significant problem for patients with schizophrenia, substantially increasing psychiatric admission risks. The 2002 Veterans Health Care Act raised medication copayments from $2 to $7. From the VA’s perspective, such health policy decisions should balance financial benefits with potential costs associated with unintended clinical consequences. Expanding our prior work, the current study documents the cost-offset of copayment revenue versus higher inpatient and emergency department (ER) costs.
Methods:
Pharmacy prescriptions, health services utilization, and VA costs for all veterans (N = 69,986) diagnosed with schizophrenia were analyzed 33 months Pre- and Post-policy change. This observational study calculated additional copayment revenue versus utilization costs (1999 adjusted dollars), contrasting veterans subject to copayment increases with a natural control group of exempt patients.
Results:
In comparison to the pre-policy period and minimal change in Exempt patients, total prescriptions for Copayment veterans (N = 33,431) continued increasing slightly, but psychotropic fills dropped 18%. During the same period, psychiatric admissions and hospital days rose 4%, reversing downward trends observed over the past decade. The total prescriptions increase yielded $17.3 million in new copayment revenue, but higher pharmacy costs of $5.5 million. Furthermore, inpatient and ER costs increased $13.3 million and $0.6 million, respectively. Therefore, the net cost-benefit revenue change from the VA perspective was a negative $2.1 million, or $745,000 annualized losses. Sensitivity analyses altering utilization costs and the proportion of post-policy changes due to higher copayments produced annualized cost-benefits ranging from -$1.4 million to $0.3 million (gain).
Implications:
This descriptive study suggests that the policy change translated into greater VA copayment revenue while possibly dampening overall pharmacy cost increases. However, unanticipated consequences included sharply reduced psychotropic fills leading to poorer adherence and higher utilization. Recognizing blunt calculations and complex causal assumptions, the VA nevertheless appeared to experience financial losses while simultaneously reducing veterans’ quality of life.
Impacts:
Policy changes targeting essential pharmacy benefits for vulnerable veterans with schizophrenia should be implemented carefully, recognizing trade-offs between immediate financial gains and the potential costs associated with clinical deterioration. Longer-term studies are needed to gauge the sustained effect over time as veterans reconcile their behaviors with higher medication expenses.
