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Medicaid Prior Authorization Policies and Imprisonment Among Patients With Schizophrenia
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Medicaid Prior Authorization Policies and Imprisonment Among Patients With Schizophrenia

Dana Goldman, PhD; John Fastenau, MPH, RPh; Riad Dirani, PhD; Eric Helland, PhD; Geoff Joyce, PhD; Ryan Conrad, PhD; and Darius Lakdawalla, PhD
This study examined the impact of prior authorization formularies on the likelihood that patients with schizophrenia will be arrested and incarcerated.
Third, we do not directly observe the mechanism that runs between prior authorization and incarceration. Ideally, one would observe that prior authorization leads to lower medication use among patients with disease, and this is then associated with higher rates of incarceration. Because we do not observe in any data the change in prisoners’ medication use before and after the adoption of prior authorization, it is not possible to test for this mechanism. As a result, our results are suggestive of this mechanism, but do not demonstrate it explicitly.

Finally, we note that there are a number of unmeasured factors that affect rates of imprisonment, above and beyond the formulary policies studied. This is demonstrated by the relatively low R2 values in our estimated models.

POLICY IMPLICATIONS

We found that prior authorization requirements for the use of atypical antipsychotics in states’ Medicaid coverage are associated with an increased likelihood that an imprisoned resident will display psychotic symptoms or report a prior diagnosis of schizophrenia. We found a similar association using the number of atypical prescriptions per capita.

Prior authorization policies were instituted to reduce spending in state Medicaid programs by steering utilization to lower-cost medications and by assisting Medicaid programs in negotiating rebates with pharmaceutical companies. This study contributes to the discussion of costs and benefits of a prior authorization policy by providing some direct evidence on the nonmedical costs of prior authorization related to increased contact with law enforcement. The analysis suggests that prior authorization and the associated reduction in atypical use may cause increased imprisonment of schizophrenic persons. The total annual cost in the United States associated with severe psychiatric disorders in jails and prisons is estimated by the Department of Justice’s Source Book of Criminal Justice Statistics11 to be $8.5 billion (based on an estimatedcost of $50,000 per ill inmate per year, with about 170,000 individuals with serious psychiatric disorders kept in jails and prisons). Adding to this expense are court costs, attorney fees, police costs, and costs of other social and medical services, suggesting that the criminal justice system is a very expensive way to deal with mental illness.

Acknowledgments

The authors wish to acknowledge ApotheCom (supported by Janssen Scientific Affairs, LLC) for providing assistance with the formatting of this manuscript.

Author Affiliations: University of Southern California, Los Angeles, CA (DG, GJ, RC, DL); Janssen Scientific Affairs LLC, Titusville, NJ (JF, RD); Claremont McKenna College, Claremont, CA (EH).

Source of Funding: This research was funded by Janssen Scientific Affairs, LLC, Titusville, NJ.

Author Disclosures: During the course of this research, the following authors held positions at Precision Health Economics: DG and DL (part- ner); and GJ and RC (consultant). Precision Health Economics received funding from Janssen to complete this study. JF and RD are employees and shareholders of Janssen.

Authorship Information: Concept and design (RD, DG, GJ); acquisition of data (DG, GJ); drafting of the manuscript (EH, DL); critical revision of the manuscript for important intellectual content (DG, GJ, RD, JF, EH, RC, DL); statistical analysis (RC, DL, EH); obtaining funding (RD, JF, DG, GJ); administrative, technical, or logistic support (RC); supervision (DL, EH).

Address correspondence to: Darius Lakdawalla, PhD, Quintiles Chair in Pharmaceutical and Regulatory Innovation, University of Southern California, 3335 S Figueroa St, Los Angeles, CA 90007. E-mail: dlakda- wa@healthpolicy.usc.edu.
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