The impact of the introduction of clozapine on the utilization of health care services for schizophrenic medicaid enrollees

Clozapine is an atypical antipsychotic drug introduced in February 1990 for patients with treatment-refractory schizophrenia. Its high cost (∼{dollar}9000/year) led many Medicaid systems to restrict access to clozapine through formulary exclusions. The objective of the study was to evaluate the impact of clozapine on the utilization and costs of drug and hospital services.; The study employed a pretest-posttest quasi-experimental research design using time-series regression techniques to compare continuously-enrolled Medicaid eligibles in New York and New Jersey. The study also compared clozapine users and schizophrenic non-users in New Jersey. Medicaid prescription drug and hospital utilization data (1988–1990) were used in the analysis.; Clozapine was associated with significant reductions in the use of pharmaceutical and hospital services. For instance, total prescriptions and expenditures decreased among clozapine patients and fewer patients used antipsychotics (−84%), lithium (−62%), and benzodiazepines (−46%). Mental health-related hospital use (−54%), cost (−52%), and length of stay (−69%) also fell for clozapine patients. Interestingly, there was an increase in hospital use among schizophrenic non-users and significant demographic (e.g., age and gender) and clinical (e.g., baseline hospital use and length of stay) differences between clozapine users and schizophrenic non-users. Clozapine expenditures totaled {dollar}3.7 million per 1000 clozapine users and total hospital and non-clozapine drug costs fell {dollar}3.4 million for this group. The net annual increase in cost associated with clozapine use was {dollar}276 per clozapine user. The cost of clozapine has fallen substantially since 1990, and this change in price would result in clozapine being a cost-saving technology.; This research has identified important economic consequences associated with the introduction of new medical technologies and provides a context for debating their costs and benefits. In addition, the research has identified two areas for future research: (1) the demographic and clinical differences in the diffusion pattern of clozapine; and (2) the increase in hospital use among schizophrenic non-users. Policy-makers attempting to balance limited pharmacy and medical budgets with the need to provide access to new medical technologies must consider the overall economic consequences of the introduction of these products and recognize that pennywise and pound foolish is poor public policy.