Research Brief

New Mexico lowers prescription drug costs for mental health and substance use disorders

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People with mental health and substance use disorders often delay or avoid seeking health care treatment for a variety of reasons, including stigma, lack of access and the cost of visiting a clinician. Even those with insurance tend to avoid treatment due to out-of-pocket expenses, which have been steadily increasing in recent years. One approach to control health care spending in commercial insurance plans is to use cost-sharing including co-payments, co-insurance and deductibles. This can reduce the cost of premiums, but it shifts more of the cost to patients.

In 2021, New Mexico passed the first law in the nation prohibiting cost-sharing for mental health and substance use disorder treatments. New Mexico’s law prohibits out-of-pocket payments for prescription drugs for patients who are covered by state-regulated commercial insurance plans, including employer-based private insurance.

A new study from the University of Minnesota School of Public Health (SPH) analyzed the law’s early effect in two key areas: rates of out-of-pocket spending for mental health-related prescription drugs, and the volume of drugs dispensed. Because the law does not apply to federal government employees, the researchers were able to compare outcomes between patients in state-regulated insurance plans versus those enrolled in federal employee health plans in New Mexico.

The study published in JAMA Health Forum found:

  • Out-of-pocket spending for mental health and substance use disorder medications fell by $6.37 per prescription — a decline of 85.6%. 
  • No significant change in the overall volume of prescription drugs dispensed.  
  • The overall decrease in out-of-pocket spending was considerably larger for branded medications compared with generic medications, suggesting the law may disproportionately benefit patients who use branded medications which are often still under patent protections and have higher average out-of-pocket costs than generic medications.

“Underuse of mental health and substance use disorder treatment is a major public health challenge in the U.S.,” said Ezra Golberstein, SPH associate professor and lead author. “Our study suggests eliminating cost-sharing for these treatments can greatly reduce patient spending. It will be important to track how this law affects overall use of mental health and substance use disorder services going forward.”

The researchers suggested the lack of an increase in overall volume of drugs dispensed could be due to a range of factors, including lack of awareness of the law and the fact that the law did not have as large an impact on the cost of common generic drugs. 

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