Due to a rapid rise in spending on antipsychotic drugs for patients with schizophrenia, the economic rationale for these expenditures has become a major mental health policy concern, particularly for Medicaid programs that fund 80% of this spending. Recent econometric studies have provided overall point estimates of the net impact of choosing atypical (newer) rather than typical (conventional, first-generation) antipsychotics on the total treatment cost of schizophrenia. While these studies did not develop estimates for different groups of patients, selected features of their results point to considerable heterogeneity in net cost impacts among patients and among specific drugs. This heterogeneity is an issue highlighted by the NIMH research focus on developing a knowledge base for personalized mental health care;heterogeneity is also a particular concern for articulating Medicaid policies and care guidelines relating to the use of specific antipsychotics, since these policies and guidelines should be adaptable to all types of patients, with varying treatment histories and illness courses. Further research that explores this heterogeneity is desirable, and is feasible because of the very large size and time span of Medicaid claims databases. This study will develop information on the varying cost impacts of choices among antipsychotics that are specific to groups of patients classified by treatment course and history. Data from the Maryland Medicaid program for 1995-2005 will be the principal database for the study. Criteria for classifying patients into groups, defined by treatment course and history, will be developed by a project advisory board with experience in clinical, policy, and guidelines development issues. For each of the patient groups, cost impact estimates will be obtained, and the estimates'sensitivity to choice of estimation method (ordinary least squares vs. instrumental variables with alternative instruments vs. propensity score weighting) will be assessed. Analogous impact estimates will be obtained for major cost and utilization components of total costs;these estimates will allow us to better understand the factors that produce net positive or negative impacts on total treatment costs. Since many Medicaid beneficiaries with schizophrenia are also covered by Medicare, we will develop analogous total cost impact estimates (including Medicare costs) of antipsychotic choices for dual eligibles. We will compare these estimates with the corresponding estimates based on Medicaid claims data alone. For this purpose, Medicare and Medicaid claims data for 2002-2005 for Maryland dual eligibles will be used. Study results will be submitted for publication, and reported to the agencies that manage Maryland's Medicaid program (the state Medicaid authority, and the Mental Hygiene Administration). Review note: This application is submitted as an R03 small grant in response to PA-06-180;the content is within the scope of "Research in Mental Health Economics" (NIMH PA-07-213).