Looking beyond the formulary budget in cost-benefit analysis.

With the introduction of newer, more expensive psychotropic medications, healthcare providers and managed care administrators must consider whether these drugs offer "value for the money." A true picture of the benefits of these drugs emerges only when all the costs of treatment are considered. Focusing exclusively on the acquisition cost of the drug can result in a misleading impression of the drug's worth. Although the medication costs associated with treating a patient with a newer drug increase, use of these agents may actually result in an overall decrease in healthcare costs, through reductions in hospitalization and length of stay, use of mental health services, and prescriptions for adjunctive drugs. In one study of the newer antipsychotic agent risperidone, the overall annual costs of treating a patient with schizophrenia were reduced by nearly $8,000 (Canadian dollars), even though medication costs increased by approximately $1,200 (Canadian dollars). Retrospective and prospective pharmacoeconomic studies can provide valuable data on the cost effectiveness of treatment with newer psychotropic medications.