Patient Outcomes and Cost Effects of Medicaid Formulary Restrictions on Antidepressants

Seth A. Seabury 1 , Darius N. Lakdawalla 2 , Deborah Walter 3 , John Hayes 4 , Thomas Gustafson 5 , Anshu Shrestha 6 ,  and Dana P. Goldman 2
  • 1 Associate Professor of Research, Department of Emergency Medicine and the Leonard D. Schaeffer Center for Health Policy and Economics, University of Southern California, USC Schaeffer Center, 635 Downey Way, VPD Suite 210, Los Angeles, CA 90089-3333, USA
  • 2 University of Southern California, Los Angeles, CA, USA
  • 3 Takeda Pharmaceuticals America, Inc., Washington, DC, USA
  • 4 National Network of Depression Centers, Ann Arbor, MI, USA
  • 5 Arnold and Porter, LLP, Washington, DC, USA
  • 6 Precision Health Economics, Los Angeles, CA, USA
Seth A. Seabury, Darius N. Lakdawalla, Deborah Walter, John Hayes, Thomas Gustafson, Anshu Shrestha and Dana P. Goldman


Many state Medicaid programs have implemented policies designed to reduce spending on prescription drugs by restricting access to branded products. For patients with major depressive disorder, formulary restrictions could severely limit access to antidepressant therapies and disrupt care. We linked data on patient outcomes and spending from 24 state Medicaid programs to information on formulary restrictions from 2001 to 2008. Outcomes included frequency of MDD-related hospitalizations and ER visits per patient and total healthcare spending. We estimated the effect of the policies on patient outcomes and spending using a difference-and-difference approach. We found that restricting access to antidepressants increased the probability of an MDD-related hospitalization by 1.7 percentage points (16.6%). Furthermore, we found no evidence that these restrictions resulted in any net savings for Medicaid.

  • Adelmann, P. K. (2003) “Mental and Substance Use Disorders Among Medicaid Recipients: Prevalence Estimates from Two National Surveys,” Administration and Policy in Mental Health, 31:111–129.

    • Crossref
  • Amador, X. F., J. H. Friedman, C. Kasapis, et al. (1996) “Suicidal Behavior in Schizophrenia and its Relationship to Awareness of Illness.” The American Journal of Psychiatry, 153:1185–1188.

    • Crossref
  • Angrist, J. D. and A. B. Krueger (1999) “Empirical Strategies in Labor Economics,” Handbook of Labor Economics, 3:1277–1366.

    • Crossref
  • Association, A. P. (1993) “Practice Guideline for Major Depressive Disorder in Adults,” Amer Psychiatric Pub Incorporated.

  • Association, A. P. (2000) Diagnostic and Statistical Manual of Mental Disorders: DSM-IV-TR ®. American Psychiatric Pub.

  • Chen, Y., C. M. Kelton, Y. Jing, et al. (2008) “Utilization, Price, and Spending Trends for Antidepressants in the US Medicaid Program,” Research in Social & Administrative Pharmacy: RSAP, 4:244–257.

    • Crossref
  • Farley, J. F., R. R. Cline, J. C. Schommer, et al. (2008) “Retrospective Assessment of Medicaid Step-therapy Prior Authorization Policy for Atypical Antipsychotic Medications,” Clinical Therapeutics, 30:1524–1539; discussion 1506–1527.

    • Crossref
  • Goldman, D. P., G. F. Joyce and P. Karaca-Mandic (2006) “Varying Pharmacy Benefits with Clinical Status: The Case of Cholesterol-lowering Therapy,” American Journal of Managed Care, 12:21–28.

  • Goldman, D.P., R. Dirani, J. Fastenau and R. M. Conrad (2014a) “Do Strict Formularies Replicate Failure for Patients With Schizophrenia?,” American Journal of Managed Care, 20:219–228.

  • Goldman, D., J. Fastenau, R. Dirani, E. Helland, G. Joyce, R. Conrad and D. Lakdawalla (2014b) “Medicaid Prior Authorization Policies and Imprisonment Among Patients With Schizophrenia,” American Journal of Managed Care, 20:577–586.

  • Institute for Clinical Systems Improvement (2008) Major Depression in Adults in Primary Care.

  • Joyce, G. F., D. P. Goldman, P. Karaca-Mandic, et al. (2008) “Impact of Specialty Drugs on the Use of Other Medical Services,” The American Journal of Managed Care, 14:821–828.

  • Karaca-Mandic, P., A. B. Jena, G. F. Joyce, et al. (2012) “Out-of-pocket Medication Costs and Use of Medications and Health Care Services Among Children with Asthma,” Journal of the American Medical Association, 307:1284–1291.

    • Crossref
  • Koyanagi, C., S. Forquer and E. Alfano (2005) “Medicaid Policies to Contain Psychiatric Drug Costs,” Health Affairs (Project Hope), 24:536–544.

    • Crossref
  • Law, M., D. Ross-Degnan and S. Soumerai (2008) “Effect of Prior Authorization of Second-generation Antipsychotic Agents on Pharmacy Utilization and Reimbursements,” Psychiatric Services, 59:540–546.

    • Crossref
  • MedPAC (2011) A Data Book: Health Care Spending and the Medicare Program.

  • Raebel, M. A., J. Schmittdiel, A. J. Karter, J. L. Konieczny and J. F. Steiner (2013) “Standardizing Terminology and Definitions of Medication Adherence and Persistence in Research Employing Electronic Databases,” Medical Care, 51:S11-S21.

    • Crossref
  • Sicras-Mainar, A., J. Maurino, L. Cordero, et al. (2012) “Assessment of Pharmacological Strategies for Management of Major Depressive Disorder and their Costs after an Inadequate Response to First-line Antidepressant Treatment in Primary care,” Annals of General Psychiatry, 11:22.

    • Crossref
  • Soumerai, S. B., T. J. McLaughlin, D. Ross-Degnan, et al. (1994) “Effects of Limiting Medicaid Drug-Reimbursement Benefits on the Use of Psychotropic Agents and Acute Mental Health Services by Patients with Schizophrenia,” New England Journal of Medicine, 331:650–655.

    • Crossref
  • Soumerai, S. B., F. Zhang, D. Ross-Degnan, et al. (2008) “Use of Atypical Antipsychotic Drugs for Schizophrenia in Maine Medicaid Following a Policy Change,” Health Affairs, 27:w185–w195.

    • Crossref
  • Vogt, W. B., G. Joyce, J. Xia, et al. (2011) “Medicaid Cost Control Measures Aimed at Second-generation Antipsychotics Led to Less Use of All Antipsychotics,” Health Affairs (Project Hope), 30:2346–2354.

    • Crossref
  • Zhang, Y., A. Adams, D. Ross-Degnan, et al. (2009) “Effects of Prior Authorization on Medication Discontinuation Among Medicaid Beneficiaries with Bipolar Disorder,” Psychiatric Services, 60:520–527.

    • Crossref
Purchase article
Get instant unlimited access to the article.
Log in
Already have access? Please log in.

Log in with your institution

Journal + Issues