This study finds that the introduction of generics may have helped to expand access to antipsychotic medications; when available, generic antipsychotics appeared to have been prescribed at higher rates than brand-name medications at a lower cost during this period. However, brand-name medications drove the bulk of gross Medicaid spending on antipsychotics despite their relatively lower use, which reflects patterns observed in the overall Medicaid drug market [7]. In 2021, the most recent year for which data was available at the time this study’s analysis was conducted, the overwhelming majority of gross Medicaid spending was devoted to reimbursements for brand-name medications.

Atypical antipsychotics drove outpatient prescriptions and gross spending during the period. Among atypical antipsychotics, the most expensive medications appear to be those without a generic option available. Notably, most atypical antipsychotics that saw increases in spending were those without generic options during some or all of the period: lurasidone (Latuda), asenapine (Saphris, Secuado), brexpiprazole (Rexulti), iloperidone (Fanpt), lumateperone (Caplyta), and pimavanserin (Nuplazid). Paliperidone, the only atypical product representing a larger proportion of claims, with a generic version on the market during the full period, and with associated increases in spending, was also the product with the lowest generic substitution rate over time.

This study has some limitations. First, this study does not examine the health outcomes associated with antipsychotic use. Rising antipsychotic use and expense may be offset with better health outcomes, thereby improving the quality and quantity of lives for those who use them. Second, the Medicaid dashboard data only includes information on overall outpatient prescriptions and spending. While study results cannot be generalized to the inpatient setting, where trends may be different, most adults with mental illness in the United States receive prescription medication and/or outpatient mental health services [15]. Additionally, the dashboard did not include information on the unique number of beneficiaries served. Thus, our analyses could not account for total Medicaid beneficiaries represented in the data, which may be a factor impacting observed trends. Lastly, rebate information is not available in the Medicaid dashboard, which means the dollar values reported from the CMS website are undoubtedly higher than what states’ Medicaid programs pay. The authors applied the federally mandated, base rebate amounts (23% brands/13% generics) and show those adjusted expenditures in Appendix Table 3. These estimates are likely to remain high. Rebate calculations include an inflationary component in addition to the base rate to account for increases in drug pricing over time, and states and managed care plans negotiate with manufacturers for supplemental rebates [13]. The impact of these additional rebate components can be especially substantial on older brand-name drugs, which can be cheaper than newer or generic counterparts after accounting for the full rebate amount. Additionally, Medicaid beneficiaries may receive outpatient medications via a providers’ 340B Drug Pricing Program, which allows participating providers to procure drugs at a reduced rate to serve safety net populations. While 340B ceiling prices match Medicaid net rebate prices, pharmaceutical companies can offer additional discounts to 340B providers, which may impact overall Medicaid spending and are not captured in this analysis [13]. Nevertheless, this study’s longitudinal exploration of gross Medicaid spending provides helps to illuminate informative trends for a vital and impactful area of national mental health care.

These research findings highlight important considerations about spending and prescribing of antipsychotic drugs in the Medicaid market. First, these results highlight potential market inefficiencies in a public insurance market. Brand-name pharmaceutical companies have great incentive to maintain or increase high prices for originator drug products and have many avenues to do so [16]. These tactics may have contributed to generic antipsychotic substitution delay from 2016 to 2021. For example, pharmaceutical companies often block generic entry to maintain market dominance for brand-name products through the practice of evergreening, where they extend their brand products’ exclusivity period and prevent generic substitution through patent extensions using litigation and reformulations [17,18,19,20]. A patent infringement lawsuit regarding brand-name Latuda delayed generic antipsychotic entry into the market to 2023 [21]. Companies may also engage product hopping, one form of evergreening where patents are extended by the creation of new, often minor, product formulations or new delivery modalities, which can successfully delay generic market entries [18]. In anticipation of generic displacement of Invega and Invega Sustenna, Janssen pharmaceuticals introduced a paliperidone reformulation product (Invega Trinza) in 2015 claiming it would improve drug compliance [22].

Second, there may be important clinical, or financial reasons that prevent switching from brand-name to generic drugs. Clinically, maintaining high levels of adherence among patients is of utmost importance for improved health outcomes. Switching patients’ medications can lead to new side effects, changes in delivery modalities, or increases in treatment costs due to resulting adverse health outcomes, all of which may disrupt adherence [23]. Additionally, there may be existing structural and resource barriers that prevent marginalized communities covered by Medicaid from regularly accessing mental health care and receiving prescriptions for new medications, including newly introduced generics [24]. Financially, state Medicaid agencies and providers may be choosing to continue prescribing brand-name versions even when generics exist because existing brand-name versions may be cheaper after accounting for full rebate amounts [13]. In these situations, switching to generic substitutes or even new brand-name drugs may not be the best clinical or financial decision for Medicaid beneficiaries.

Lastly, existing state policies may shape uptake of generic medications. Most states have policies in place that modulate pharmaceutical prescription patterns, such as prior authorizations, step therapy, or monthly caps. These policies may limit providers’ ability to prescribe new medications if they are more expensive than existing options. While these policies are aimed at reducing expenditures while increasing the use of preferred medications, earlier work on prior authorizations has found that they can instead reduce the use of targeted medications after implementation [8, 9]. It is important to further understand the role that mental health care access, costs, and existing policy play in driving existing antipsychotic prescription and spending trends.