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Formularies are not likely to control costs for psychotropic drugs as well as they do for some other types of drugs

To control rising pharmacy costs, insurers are increasingly turning to drug formularies (lists of drugs covered by a plan that often give patients financial incentives to choose lower cost drugs). However, formularies are not likely to control costs for psychotropic drugs (for example, antidepressants and antipsychotics) as well as they control costs for certain other classes of drugs, according to Haiden A. Huskamp, Ph.D., of Harvard Medical School. Her work was supported by the Agency for Healthcare Research and Quality (HS10803).

In a recent paper, Dr. Huskamp examines several issues that policymakers should consider when addressing formulary design for psychotropic drugs. She cautions that in setting formulary policy, any gains in price discounts must be weighed against the potential costs of restricting drug choice. For instance, patients often respond quite differently to different drugs within the same class, and often a trial-and error approach with different drugs is needed to find the one that works best. Many patients and their clinicians will be unwilling to switch medications that are working well, so payers will have greater difficulty moving significant market share for these drugs.

As a result, incentive formularies are not likely to result in large discounts from manufacturers. On the other hand, an incentive formulary could shift costs from the plan to the patient, increasing the out-of-pocket burden for some people with chronic mental illness. One possibility is a stepped formulary that requires use of a generic drug as a first-line treatment for new users as a reasonable approach.

See "Managing psychotropic drug costs: Will formularies work?" by Dr. Huskamp, in the September 2003 Health Affairs 22(5), pp. 84-96.

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