Payers of pharmaceutical benefits are increasingly turning to drug formularies in an attempt to control rising pharmacy costs, including those for psychotropic drugs. In this paper I examine several issues that policymakers should consider when addressing formulary design for psychotropic drugs: heterogeneity within mental health disorders and limited information about treatment effectiveness for individual patients; the potential for plans to try to use formularies to avoid adverse selection and implications for psychotropic coverage; the interaction of Medicaid formulary policy and manufacturers' incentives for psychotropic innovation; and incentives created by mental health institutions that decrease formularies' potential effectiveness in controlling psychotropic drug costs.

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adverse selection pharmaceutical benefits heterogeneity psychotropic drug costs rising pharmacy costs mental health disorders formulary

Haiden A, Huskamp,.Managing psychotropic drug costs: will formularies work?. 22 (5),84-96.

Haiden A, Huskamp,"Managing psychotropic drug costs: will formularies work?" 22

Haiden A, Huskamp,"Managing psychotropic drug costs: will formularies work?"