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Policy making's unintended consequences

March 1, 2006
by Monica E. Oss
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Line-item management of schizophrenia treatment is not cost-effective

The law of unintended consequences is essentially that the actions of people—and especially of government—always have unanticipated or “unintended” effects. Economists and other social scientists examine policies in light of the power of unintended consequences; politicians and popular opinion largely ignore it.

I recently had a chance to see the law of unintended consequences in action. Iowa's Medicaid program is proposing preauthorization requirements for newer antipsychotics that will, in effect, limit first-line antipsychotic access to many suffers of schizophrenia. Iowa's Medicaid situation is typical of policy discussions in many states (and probably in the future for Medicare Part D plans). In a vacuum, the policy decision makes sense: limiting first-line access to newer antipsychotics will save money in the state's Medicaid pharmaceutical budget (although in Iowa there were no projections of how much money will be saved per year). However, if you look beyond the line item to the management of schizophrenia and its total system costs, this strategy is penny-wise and pound-foolish (to paraphrase Ben Franklin).

I testified on behalf of NAMI Iowa to the Iowa Medicaid Pharmaceutical & Therapeutic Committee. My perspective is that when considering opportunities for reducing schizophrenia's costs to state government, requiring prior authorization for antipsychotics is a poor policy choice. Many better options for managing schizophrenia's costs exist, which would be more effective and less expensive for the citizens of Iowa. My opinion is based on three factors:

  • The state spending issue. Schizophrenia presents unique policy and planning challenges for state health and social service systems. The government—particularly state and local governments—pays for the majority of the treatment and social services for individuals with schizophrenia. In fact, we spend more in corrections and social service costs for individuals with untreated and poorly treated mental illness than we spend on all mental health treatment resources for these individuals. Although 1% of the population has schizophrenia, people with schizophrenia use 20% of mental health treatment resources and 55% of corrections and social service resources for people with mental illness. The cost savings the state will achieve by limiting access to antipsychotics is a fraction of the total spending on the treatment of this illness—and likely will increase state costs in other areas.

  • Cost-offset research data. Recovery-focused treatment of schizophrenia is effective and has been demonstrated to reduce mental health system costs by decreasing the use of psychiatric hospitals, emergency rooms, jails and prisons, and social service agencies. For many consumers, availability of a full range of medication options plays a critical role in recovery. Ready access to appropriate medication using recovery-focused disease management models is the key to achieving system cost savings.

  • Evidence-based treatment models. For people suffering from schizophrenia, the technology available to support recovery has been limited until recently. Patients now have six newer antipsychotics in addition to a number of pre-1990 agents. Each is a significantly different chemical compound with markedly different effectiveness and side effects, and we have not yet completed the research to match these newer medications to patients by age, race, ethnicity, sex, or genetic factors. For this reason, a full range of medications is required for the consumer and his/her physician to find an effective treatment match. This is consistent with SAMHSA's 2005 evidence-based treatment guidelines for medication management.

My perspectives on behalf of NAMI Iowa weren't persuasive enough: The committee voted to recommend a number of policies requiring medication preauthorization. If the Iowa legislature approves this, we'll have a living laboratory for measuring those unintended consequences.

Monica E. Oss, Editor Emeritus of Behavioral Healthcare, is CEO of OPEN MINDS, a research and management consulting firm for the behavioral health and social services field.